Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p22
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 22/101)
Character Range: 91342–94392

discussion above on groups of contracts issued no more than a year apart). Accordingly, their liabilities for remaining coverage and liabilities for incurred claims would be permitted to be measured for each portfolio as a whole (and, for those entities with only one portfolio, effectively at the whole-of-entity level). The Boards concluded that paragraph 14 would be modified to clarify this point.

Terminology

     BC47            The Boards are conscious that most of the requirements in AASB 17/PBE IFRS 17 make reference to 'group(s) of contracts', 'group(s) of insurance contracts', and 'same group' because it has been drafted for private sector entities that would typically have groups of insurance contracts as their main unit of account. However, public sector entities applying the exemption from sub-grouping would read, for example, the reference in AASB 17/PBE IFRS 17.57 to: "If at any time during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, …" as requiring: "If at any time during the coverage period, facts and circumstances indicate that a portfolio of insurance contracts is onerous, …".

     BC48            The Boards also note that entities are generally expected to read the requirements of AASB 17/PBE IFRS 17 based on their own circumstances. For example, when relevant, entities are required to regard references in AASB 17/PBE IFRS 17 to 'insurance contracts' as applying to 'reinsurance contacts held' in accordance with AASB 17/PBE IFRS 17.4. Therefore, the Boards concluded that public sector entities should be capable of reading AASB 17/PBE IFRS 17, when relevant, as applying to a portfolio unit of account and decided that no public-sector specific terminology modifications are needed regarding the terms 'group(s)' and 'portfolio(s)'.

Initial recognition when contracts are onerous (modification to paragraph 25)

     BC49            In general, the following applies under AASB 1023/PBE IFRS 4.

          (a) An insurance liability is recognised when premium is received or receivable, because the measurement model simply defers unearned premiums received or receivable on the balance sheet. Premiums might be received before coverage begins, on the day coverage begins or after coverage begins.

          (b) An unexpired risk liability (onerous contract loss) is recognised based on whether unearned premiums are adequate to meet expected future claims and other relevant costs. Accordingly, loss recognition is dependent on when unearned premiums are recognised on the balance sheet.

     BC50            In contrast, AASB 17/PBE IFRS 17.25 requires a group of insurance contracts an entity issues to be recognised from the earliest of the following:

          (a) the beginning of the coverage period of the group of contracts;

          (b) the date when the first payment from a policyholder in the group becomes due; and

          (c) for a group of onerous contracts, when the group becomes onerous.

     BC51            The Boards