Internal:Training/IFRS17
🎯 Introduction. This training program takes you from first principles to a complete understanding of IFRS 17, the international accounting standard for insurance contracts. Each page builds on the last, starting from the most basic notions and adding complexity one step at a time. No prior knowledge of insurance or accounting is assumed. By the end, you will be able to read, interpret, and work with IFRS 17 financial statements with confidence. Click to explore the training.
Why insurance exists
- Uncertainty and risk
- Pooling as a solution
- The role of the insurer
The economics of an insurance contract
- Anatomy of a premium
- The timing mismatch and the time value of money
- Where profit comes from
What is accounting and why it matters
- The purpose of accounting: who needs it and why
- The balance sheet and the income statement
- Key principles: recognition, measurement, and matching
Accounting for an insurer
- The insurer's balance sheet: reserves as the dominant liability
- The insurer's income statement: premiums, claims, and expenses
- The hard questions: when is revenue earned, how do you value an uncertain promise?
Why insurance broke global standards
- Different countries, different answers
- IFRS and the promise of one global language
- IFRS 4 as a temporary compromise and why IFRS 17 was needed
The building blocks: overview
- The idea of decomposing a liability into transparent pieces
- The four components at a glance: FCF, discounting, RA, CSM
- How the building blocks solve the problems of the old world
Fulfilment cash flows
- Which cash flows to include
- The contract boundary
- Probability-weighted estimates and keeping assumptions current
Discounting
- Why discounting is essential for insurance liabilities
- Choosing the discount rate: top-down vs. bottom-up
- How discounting affects the liability over time
The risk adjustment
- What the risk adjustment represents
- How to measure it: confidence levels, cost of capital, VaR
- How the risk adjustment releases as risk expires
The contractual service margin
- What the CSM represents: unearned profit locked away on day one
- How the CSM absorbs changes in estimates
- How the CSM releases into revenue: coverage units
Grouping contracts
- Portfolios: contracts with similar risks
- Profitability groups: separating profitable from onerous
- Annual cohorts: why contracts issued more than a year apart must be separated
The general model: initial recognition
- Day one: measuring the four building blocks
- Profitable contracts: CSM is positive
- Onerous contracts: CSM is zero, loss recognized immediately
The general model: subsequent measurement
- Passage of time: unwinding discount, releasing RA, releasing CSM
- Changes in estimates: future service adjusts CSM, current/past service hits P&L
- Claims incurred, settled, and derecognition
The income statement under IFRS 17
- Insurance revenue: not premiums, but service delivered
- Insurance service expenses and the insurance service result
- Insurance finance income/expense and the OCI option
- When PAA is available: the eligibility test
- How PAA works: simplified measurement
- What you keep and what you skip vs. the general model
The variable fee approach
- What are direct participating contracts
- The variable fee concept: how VFA modifies the general model
- Scope and the three eligibility criteria
Reinsurance held
- Reinsurance as the mirror image: the insurer is the customer
- Key asymmetries: day-one gains and loss recovery
- Proportionate vs. non-proportionate reinsurance
Contract modifications and portfolio transfers
- When contract terms change: derecognize or continue?
- The criteria and consequences of modification
- Portfolio transfers: measuring at the transaction date
Transition to IFRS 17
- The full retrospective approach: the gold standard
- The modified retrospective approach: practical approximation
- The fair value approach: when history is unavailable
Presentation, disclosure, and interpretation
- How IFRS 17 numbers appear in published financial statements
- Key disclosure requirements
- Reading IFRS 17 reports as an analyst or stakeholder