Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p97
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 97/101)
Character Range: 300164–303234

Entities to supersede AAS 25.

     BC334        In considering the facts and circumstances surrounding the AASB's decisions not to adopt IAS 26 (and thereby have an exception to its IFRS adoption policy), the AASB concluded that the legislative environment as well as tailored financial reporting requirements for superannuation entities (which were not adequately addressed in IAS 26) justified the need for a specific Australian pronouncement (see paragraphs BC7–BC11 of AASB 1056). In contrast, overall, the AASB concluded that IFRS 17 represents a comprehensive, internationally consistent, set of financial reporting requirements for Australian insurers, despite the issues noted in paragraph BC332(b).

     BC335        On balance, the AASB considered that the benefits arising from international harmonisation in relation to the accounting for insurance contracts, and the greater alignment of the basis for revenue recognition with other industries noted in paragraph BC332(a)(ii), outweighed the drawbacks noted in paragraph BC332(b).  Accordingly, the AASB decided to:

          (a) supersede AASB 4 and AASB 1023 for private sector entities when AASB 17 is applied to those entities, that is, for annual periods beginning on or after 1 January 2023;

          (b) repeal AASB 4 and AASB 1023 for annual periods beginning on or after 1 July 2026 when AASB 17 is applied to all entities, including public sector entities; and

          (c) repeal AASB 1038 and supersede Interpretation 1047 Professional Indemnity Claims Liabilities in Medical Defence Organisations (see paragraphs BC337–BC340) for annual periods beginning on or after 1 January 2023, on the basis that AASB 17 applies to those periods in respect of private sector entities and the pronouncements are not relevant to public sector entities.

     BC336        The AASB noted that a consequence of its decision to supersede AASB 1023 and AASB 1038 is that Australian specific disclosures (eg paragraphs 17.8 and 17.10(c) of AASB 1038 relating to regulatory capital disclosures and conformance with the Life Insurance Act 1995) are no longer required. The AASB is closely monitoring the response of the Australian Prudential Regulation Authority to the introduction of AASB 17. At this stage there are no plans for the AASB to include similar supplementary disclosures in AASB 17.

Implications for Interpretation 1047 Professional Indemnity Claims Liabilities in Medical Defence Organisations

     BC337        Interpretation 1047 was originally issued in June 2002 to address divergent views as to whether a Medical Defence Organisation (MDO) should recognise a liability for future claims arising from the medical indemnity insurance it offered, given the MDO had discretion as to whether to pay claims made by members. The Interpretation required that a MDO recognise its obligations in a manner consistent with the principles in AASB 1023.

     BC338        After 1 July 2003, the Medical Indemnity Act 2002 came into effect and regulatory arrangements allowed only authorised general