Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p91
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 91/101)
Character Range: 283286–286523

the measurement of investments backing insurance liabilities in the context of AASB 17/PBE IFRS 17.

     BC307        The Boards noted informal feedback suggesting public sector entities with arrangements that might fall within the scope of AASB 17/PBE IFRS 17 would typically be applying a fair value through profit or loss approach to recognise and measure investments, when available under the Accounting Standards. In many cases, this is due to the government-wide accounting policy framework and/or because many entities have their investments in the custody of central agencies that only provide information for financial reporting purposes on a fair value through profit or loss basis.

Risk mitigation program and other similar costs

     BC308        The Boards noted that most entities that conduct insurance business undertake risk mitigation activities, which are not directly related to particular insurance arrangements. They could include, for example:

          (a) risk assessments of a customer's premises that are to be insured; and/or

          (b) education programs among policyholders regarding safe work practices.

     BC309        The Boards observed that, for private sector for-profit insurers, these activities would be expected to typically be closely associated with underwriting or claims management and to be attributable to particular contracts or groups of contracts.

     BC310        The Boards also observed that the same types of activities are conducted by public sector entities; however, they would often have a broader community focus, including for example:

          (a)                    road safety campaigns;

          (b)                   research into medical practices in public hospitals; and/or

          (c)                    research into rehabilitation techniques to improve return to work experience.

     BC311        The Boards noted that, compared with AASB 1023/PBE IFRS 4, AASB 17/PBE IFRS 17 has more specific requirements around the types of costs that are to be accounted for as a part of insurance contract liabilities and more specific presentation requirements around the income statement line items that make up the 'insurance service result'. In particular, they noted that costs which might currently be accounted for as a part of the 'underwriting result' under AASB 1023/PBE IFRS 4 may not be sufficiently attributable to the fulfilment of particular groups of contracts to be accounted for within the 'insurance service result' under AASB 17/PBE IFRS 17.

     BC312        This led the Boards to consider whether there is a need for public-sector-specific modifications in respect of costs associated with risk mitigation activities that might not be attributable to particular groups of contracts. This is particularly since these costs may be more significant in a public sector context (compared with private sector for-profit entities).

     BC313        The Boards noted the following feedback received from stakeholder outreach conducted in 2020-21.

          (a) Some public sector entities that provide risk coverage for policyholders also have a separate (sometimes legislated) objective of educating communities about safety or investing