Document ID: chunk:federal_register_of_legislation:F2023C00382:front:0:p82
Version: federal_register_of_legislation:F2023C00382
Segment Type: other
Provision Reference: 
Character Range: 215782–218844

the group of insurance contracts, as specified in paragraph B115, before the transition date.
C5B If, and only if, it is impracticable for an entity to apply paragraph C4(aa) for an asset for insurance acquisition cash flows, the entity shall apply the following approaches to measure the asset for insurance acquisition cash flows:
(a) the modified retrospective approach in paragraphs C14B–C14D and C17A, subject to paragraph C6(a); or
(b) the fair value approach in paragraphs C24A–C24B.

Modified retrospective approach
C6 The objective of the modified retrospective approach is to achieve the closest outcome to retrospective application possible using reasonable and supportable information available without undue cost or effort. Accordingly, in applying this approach, an entity shall:
(a) use reasonable and supportable information. If the entity cannot obtain reasonable and supportable information necessary to apply the modified retrospective approach, it shall apply the fair value approach.
(b) maximise the use of information that would have been used to apply a fully retrospective approach, but need only use information available without undue cost or effort.
C7 Paragraphs C9–C19A set out permitted modifications to retrospective application in the following areas:
(a) assessments of insurance contracts or groups of insurance contracts that would have been made at the date of inception or initial recognition;
(b) amounts related to the contractual service margin or loss component for insurance contracts without direct participation features;
(c) amounts related to the contractual service margin or loss component for insurance contracts with direct participation features; and
(d) insurance finance income or expenses.
C8 To achieve the objective of the modified retrospective approach, an entity is permitted to use each modification in paragraphs C9–C19A only to the extent that an entity does not have reasonable and supportable information to apply a retrospective approach.

Assessments at inception or initial recognition
C9 To the extent permitted by paragraph C8, an entity shall determine the following matters using information available at the transition date:
(a) how to identify groups of insurance contracts, applying paragraphs 14–24;
(b) whether an insurance contract meets the definition of an insurance contract with direct participation features, applying paragraphs B101–B109;
(c) how to identify discretionary cash flows for insurance contracts without direct participation features, applying paragraphs B98–B100; and
(d) whether an investment contract meets the definition of an investment contract with discretionary participation features within the scope of AASB 17, applying paragraph 71.
C9A To the extent permitted by paragraph C8, an entity shall classify as a liability for incurred claims a liability for settlement of claims incurred before an insurance contract was acquired in a transfer of insurance contracts that do not form a business or in a business combination within the scope of AASB 3.
C10 To