Definition:Insurance service expense
| Insurance service expense | |
|---|---|
| Category | kpis; pnl |
| Aliases | insurance service expenses |
| Metric id | insurance_service_expense |
| Unit | currency |
| Related terms | Insurance service result, Insurance revenue |
| Definition | Incurred claims plus attributable expenses plus loss-component movements under IFRS 17. |
đ Insurance service expense is the IFRS 17 income-statement line that gathers the costs of fulfilling insurance contracts during the period: claims incurred, expenses directly attributable to insurance activity, amortization of insurance acquisition cash flows, and movements in the loss component of onerous contracts. The line is the expense counterpart to insurance revenue. Together the two frame how the standard presents the profitability of providing insurance service.
âď¸ Costs enter the line when the insurer incurs them, not when it pays them, and only fulfilment-related amounts qualify. General overhead that cannot be attributed to insurance contracts sits elsewhere, and repayments of investment components stay out, just as they stay out of insurance revenue. The onerous-contract mechanics give the line its distinctive feature. When the insurer identifies expected losses on unprofitable business, it recognizes them immediately as an expense; as it later bears those losses, it reverses them through this same line. Deteriorations and recoveries in contract profitability therefore show up here, not smoothed away. The line is expressed in currency and disclosed by segment.
đŻ Reading the line against insurance revenue is the fastest gauge of underwriting cost discipline under IFRS 17; it plays a role similar to the claims and expense components of a combined ratio in property-casualty analysis. Immediate recognition of onerous losses makes the line an early-warning signal: pricing weakness or adverse assumption changes surface in the period the insurer identifies them, not years later. Analysts accordingly decompose the line into claims experience, attributable expenses, and loss-component movements, separating operational performance from changes in outlook.