Question ID: 1844
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Article: 9
Status: Final
Date of submission: 13 Jun 2019
Question
How accruals and deferrals are valued under SII rules?
By "valued" I mean the decision whether they have no value (SIII value = 0) or they should have some value (SII value >0).
I am aware of the fact that DAC = 0. But what about other items.
By accruals I mean:
1) Expense Accrual (e.g. accrual booked for services which were provided in 2018, but will be invoiced in 2019 (e.g. audit fee or similar))
2) Revenue Accrual
By deferral I mean:
3) Expense Deferral (typically DAC, but other items exist)
4) Revenue Deferral.
EIOPA answer
Assuming that the question is referring to deferrals and accruals other than those included in TP :
• All assets and liability valuations should be in accordance with Article 75 of the SII Directive, so they should be market valued.
• Article 9(1) of the Regulations requires that assets and liabilities be recognised in accordance with IFRS. Normal accounting practices should therefore be applied to decide whether an accrual or deferral exists.
• Article 9(2) of the regulations state that assets and liabilities should be measured in accordance with IFRS, so long as they are consistent with Article 75. There is nothing to suggest that normal accounting conventions should not be applied, unless otherwise stated in Articles 9-16.
So, use Market value and normal accounting recognition and valuation.
• If you have received a service in full, but not received the invoice then accrue in full.
• If you have received part of the service but not all, and not been invoiced then apportion between the accounting periods.