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European Insurance and Occupational Pensions Authority

2254

Q&A

Question ID: 2254

Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)

Topic: Group Solvency Requirement

Article: N/A

Status: Rejected

Date of submission: 14 Feb 2021

Question

IFRS 17 – Impact on EIOPA’s recognition and measurement of risks e.g. in the standard model. As I didn’t find a solution to my queries in your FAQ I am sending you herewith my request. May I please ask you a question on IFRS 17 and consequences for your insurance analytics, especially EIOPA’s standard model. Just to mention that I have studied in-depth ‘EIOPA’s analysis of IFRS 17 Insurance Contracts` published 18/10/2018. In this document you explicitly state that ‘IFRS 17 provides for an explicit measurement of the insurance risk inherent in insurance contracts – measured from the perspective of the entity considering all market inputs’. Additionally you are stating ‘IFRS 17 financial statements therefore are expected to be clearer and easier to understand than the current IFRS 4’. Especially I am wondering to which extent up to now available information will under IFRS 17 continue to be available or not, and which information could then create alternative inputs for measurement. As a specific case let’s concentrate on your standard model, which is substantial for the risk measurement of insurers. I understand that as an example for nonlife the information on net written premiums or net claims reserves are vital information for the standard model. Do you expect this information to available also under IFRS 17? Will this information be available as normal parts of the IFRS 17 accounting? Or will insurers have to make specific extra efforts to deliver these info? Additionally, any comments on other key input data is highly appreciated. E.. g. will net combined ratios (including cost and claims ratios) continue to be available? Have you got ideas on the development of key performance indicators under IFRS 17 which you could please share with me, e.g. related to the CSM?

Background of the question

EIOPA's analysis of IFRS 7 insurance contracts >>see above question

EIOPA answer

Written and earned premiums are still mandatory disclosure under IFRS 17. The insurance results need to separately disclosed from reinsured insurance income. It can be expected that one of the key pieces of information in the future will be the allocation of the contractual service margin.