Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p92
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 92/101)
Character Range: 286204–289397

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 in infrastructure that promotes safe outcomes.

          (b) Public sector entities are typically separately accountable for costs associated with risk mitigation and they are usually readily identifiable.

Boards' position on risk mitigation program and other similar costs in AASB ED 319/NZASB ED 2022

     BC314        Based on the above considerations, the Boards decided that there is no need to propose any public sector modifications in respect of risk mitigation program and other similar costs.

     BC315        The Boards considered that:

          (a) public sector entities would have little difficulty identifying risk mitigation program costs and classifying them in accordance with AASB 17/PBE IFRS 17; and

          (b) presenting these costs separately from the insurance service result would be useful in a public sector context since they usually relate to a separate and identifiable organisational objective.

Risk mitigation program and other similar costs – AASB ED 319/NZASB ED 2022-3 feedback and Boards' conclusion

     BC316        There was no specific feedback from respondents to AASB ED 319/NZASB ED 2022-3 on risk mitigation program and other similar costs. The Boards concluded that it is not appropriate to have public sector modifications on the classification or presentation of risk mitigation program and other similar costs in the context of AASB 17/PBE IFRS 17.

Other matters raised in feedback on AASB ED 319/NZASB ED 2022-3

     BC317        Respondents to AASB ED 319/NZASB ED 2022-3, either in their formal submissions, or in follow-up discussions, raised the following matters:

          (a) accounting for insurance contracts that provide adverse development coverage; and

          (b) accounting for non-distinct investment components.

Adverse development coverage

     BC318        In respect of insurance contracts that provide adverse development coverage, the Boards noted that the coverage period relates to the time over which the amount of claims is expected to remain uncertain, which would often be up to the time of settlement, which is potentially a long period. Accordingly, the insurer would recognise any compensation received or receivable for accepting adverse development risk over that potentially long coverage period and may never recognise a liability for incurred claims, even though the liability is managed as a claims liability. The Boards considered whether public sector entities, in particular, might have insurance contracts that provide adverse development coverage and whether there are any public sector specific reasons for modifying AASB 17/PBE IFRS 17 in accounting for such coverage.

     BC319        The Boards concluded that there is no need for public sector modifications in respect of adverse development coverage on the basis that:

          (a) while a public sector