Document ID: chunk:federal_register_of_legislation:F2023C00382:front:0:p88
Version: federal_register_of_legislation:F2023C00382
Segment Type: other
Provision Reference: 
Character Range: 231656–234585

amount recognised in other comprehensive income on the underlying items.
C19A Applying paragraph B137, an entity may choose not to change the treatment of accounting estimates made in previous interim financial statements. To the extent permitted by paragraph C8, such an entity shall determine amounts related to insurance finance income or expenses at the transition date as if it had not prepared interim financial statements before the transition date.

Fair value approach
C20 To apply the fair value approach, an entity shall determine the contractual service margin or loss component of the liability for remaining coverage at the transition date as the difference between the fair value of a group of insurance contracts at that date and the fulfilment cash flows measured at that date. In determining that fair value, an entity shall not apply paragraph 47 of AASB 13 Fair Value Measurement (relating to demand features).
C20A For a group of reinsurance contracts held to which paragraphs 66A–66B apply (without the need to meet the condition set out in paragraph B119C), an entity shall determine the loss-recovery component of the asset for remaining coverage at the transition date by multiplying:
(a) the loss component of the liability for remaining coverage for the underlying insurance contracts at the transition date (see paragraphs C16 and C20); and
(b) the percentage of claims for the underlying insurance contracts the entity expects to recover from the group of reinsurance contracts held.
C20B Applying paragraphs 14‒22, at the transition date an entity might include in an onerous group of insurance contracts both onerous insurance contracts covered by a group of reinsurance contracts held and onerous insurance contracts not covered by the group of reinsurance contracts held. To apply paragraph C20A in such cases, an entity shall use a systematic and rational basis of allocation to determine the portion of the loss component of the group of insurance contracts that relates to insurance contracts covered by the group of reinsurance contracts held.
C21 In applying the fair value approach, an entity may apply paragraph C22 to determine:
(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.
C22 An entity may choose to determine the matters in paragraph C21 using:
(a) reasonable and supportable information for what the entity would have determined given the terms of the contract and the market conditions