New standard IFRS 17: Insurance contracts

From January 1, 2023, the application of the new standard IFRS 17 Insurance Contracts began. The mentioned standard replaces the previous IFRS 4, which presents a transitional standard. 

What does the new IFRS 17 represent?

The new IFRS 17 represents a newly adopted accounting standard developed with the idea of increasing transparency and comparability of information and homogenising rules contained in accounting standards. Accounting standards, on the other hand, form the framework for compiling and presenting financial statements.

The current standard applies from the beginning of 2023 and replaces IFRS 4, which presents a transitional standard. Namely, IFRS 4 allowed insurance companies to use local accounting regulations, resulting in lower comparability and transparency in financial reporting. 

IFRS 17 – a solution to existing problems?

IFRS 17 represents a solution to the existing problems and obstacles that insurance companies face. A completely new accounting concept changes the perspective of the accounting treatment of insurance contracts compared to the previous one.

The standard will primarily affect insurance companies’ operations’ accounting, actuarial and IT aspects. No, in addition to the financial sphere, it also includes other areas of company operations.