Document ID: chunk:federal_register_of_legislation:F2023C00382:front:0:p17
Version: federal_register_of_legislation:F2023C00382
Segment Type: other
Provision Reference: 
Character Range: 42506–45359

contracts; and
(b) the length of the coverage period of the group of contracts.
55 Using the premium allocation approach, an entity shall measure the liability for remaining coverage as follows:
(a) on initial recognition, the carrying amount of the liability is:
(i) the premiums, if any, received at initial recognition;
(ii) minus any insurance acquisition cash flows at that date, unless the entity chooses to recognise the payments as an expense applying paragraph 59(a); and
(iii) plus or minus any amount arising from the derecognition at that date of:
                    1. any asset for insurance acquisition cash flows applying paragraph 28C; and
                    2. any other asset or liability previously recognised for cash flows related to the group of contracts as specified in paragraph B66A.
(b) at the end of each subsequent reporting period, the carrying amount of the liability is the carrying amount at the start of the reporting period:
(i) plus the premiums received in the period;
(ii) minus insurance acquisition cash flows; unless the entity chooses to recognise the payments as an expense applying paragraph 59(a);
(iii) plus any amounts relating to the amortisation of insurance acquisition cash flows recognised as an expense in the reporting period; unless the entity chooses to recognise insurance acquisition cash flows as an expense applying paragraph 59(a);
(iv) plus any adjustment to a financing component, applying paragraph 56;
(v) minus the amount recognised as insurance revenue for services provided in that period (see paragraph B126); and
(vi) minus any investment component paid or transferred to the liability for incurred claims.
56 If insurance contracts in the group have a significant financing component, an entity shall adjust the carrying amount of the liability for remaining coverage to reflect the time value of money and the effect of financial risk using the discount rates specified in paragraph 36, as determined on initial recognition. The entity is not required to adjust the carrying amount of the liability for remaining coverage to reflect the time value of money and the effect of financial risk if, at initial recognition, the entity expects that the time between providing each part of the services and the related premium due date is no more than a year.
57 If at any time during the coverage period, facts and circumstances indicate that a group of insurance contracts is onerous, an entity shall calculate the difference between:
(a) the carrying amount of the liability for remaining coverage determined applying paragraph 55; and
(b) the fulfilment cash flows that relate to remaining coverage of the group, applying paragraphs 33–37 and B36–B92. However, if, in applying paragraph 59(b), the entity does not adjust the liability for incurred claims for the time value of money