With this year’s anticipated finalization of IFRS 4 Phase 2 accounting for insurance contacts, there has been significant interest among insurers globally regarding the key features of the new standard.
While the concept of ‘level of aggregation’ may seem somewhat technical and esoteric, it is one of the key drivers of profit recognition under the new standard. The extent to which contracts are aggregated may have a significant impact on the statement of comprehensive income of an insurance entity, and on its systems, processes and data.
The IASB’s final decisions and guidance on ‘level of aggregation’ will only be known when the standard is published, insurance entities should start to consider how they might interpret the guidance available and meet the considerable challenge of increased granularity. In particular, entities should:
If you would like to discuss any of the ideas raised – or to discuss your organization’s IFRS 4 Phase 2 implementation plan, please contact your local KPMG office.
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For further reading on this topic please see our article – Level of aggregation under IFRS 4 Phase 2 for insurance contracts.