The objective of the EFRAG TEG meeting held on 4th of June 2020 was to agree on recommending the draft endorsement advice on the IFRS 4 amendments to the EFRAG Board and to discuss aspects of the draft endorsement advice on IFRS 17 that have not been discussed previously.
- Draft endorsement advice – Amendments to IFRS 4 Insurance contracts (Link to Agenda paper 10-02B)
The deadline for the final endorsement advice on the amendments to IFRS 4 to the European Commission is the 7th of July 2020. The conclusion of the draft endorsement advice on the amendments to IFRS 4 is that the amendments meet the qualitative characteristics required to support economic decisions and the assessment of stewardship, lead to sufficiently prudent accounting, and are not contrary to the true and fair view principle.
The EFRAG TEG members agreed to recommend the draft endorsement advice on the IFRS 4 amendments to the EFRAG Board with the suggested minor changes that will be incorporated in the Cover letter and the Appendix 3 of the draft endorsement advice.
- Discussion on Business models (Link to Agenda paper 10-03)
The EFRAG TEG members discussed on the wording to be included in the draft endorsement advice on business models in the context of the IFRS 17 as part of the Appendix 3. The request for endorsement advice from the European Commission asked to address the question on how does IFRS 17 take into account the specificities of the insurance sector and whether the different accounting methods reflect properly the different business models.
The conclusion of the proposed text is that the requirements of IFRS 17 take into account the broad categories of products offered by European insurers with the relevant modifications to the general model that will capture the specificities of the different types of products.
The EFRAG TEG members suggested a wording changes to be made in the text. The EFRAG Secretariat will update the text in accordance with the received comments.
- Release of CSM for insurance contract with direct participation features (Link to Agenda paper 10-04)
The objective of this agenda item was to address the request raised by the European Commission on how the release pattern of the CSM for the contracts with direct participation features reflects business models of the insurance sector.
However, the request was received before the IASB tentatively decided to change the CSM allocation for insurance contracts with direct participation feature. Also, EFRAG Secretariat noted that the question is already addressed in the Appendixes 2 and 3.
In the absence of time, the EFRAG TEG members were asked to provide their written comments on the Agenda paper until 9th of June.
For the Update on IASB tentative decisions please refer to the Agenda paper 10.05A (Link) and Agenda paper 10.05B (Link). Papers were not discussed during the meeting and the EFRAG TEG members were asked to provide written comments on the papers. For the more information on the IASB papers, please refer to our blog and our In transition publication.
EFRAG TEG will continue to discuss on the content to be included in the draft endorsement advice for IFRS 17 during the next meetings. Next meeting is scheduled for the 8th of July.