The International Accounting Standards Board (IASB) issued on December 9, 2021 an amendment to the transition requirements to IFRS 17 (Insurance Contracts), which allows insurers to opt, upon first application of the new standard, for a different way of presenting comparative data on financial assets.
The amendment concerns only the transition phase to the new Standard and does not affect any other requirements of IFRS 17.
IFRS 17 and IFRS 9 (Financial Instruments) in fact provide for different transition requirements. For some insurance companies, these differences could cause temporary accounting mismatches between financial assets and liabilities of insurance contracts, differences that would be evident in the comparative information produced in the first-time application financial statements of the new standards.
The amendment aims to avoid these temporary accounting mismatches and, therefore, will improve the quality of comparative information for investors.
IFRS 17, including this amendment, is effective for years starting on or after January 1, 2023.