The IASB issued 2017 the new comprehensive insurance accounting standard IFRS 17, with amendments issued in 2020. In addition to its general model, IFRS 17 introduces a modified approach, usually referred to as Variable Fee Approach (VFA), for a specific class of participating insurance contracts. Both the identification of such contracts and the application of the approach require a number of accounting decisions based on interpretations of the sophisticated criteria provided by IFRS 17.

Organised by the EAA – European Actuarial Academy GmbH.

The web session is suited for actuaries with both knowledge of the general model of IFRS 17 and of the mechanics of traditional participating insurance contracts. The background knowledge is necessary since there will be no time to introduce those concepts.

Technical Requirements
Please check with your IT department if your firewall and computer settings support web session participation (the programme Zoom will be used for this online training). Please also make sure that you are joining the web session with a stable internet connection.

 

Starting from the revenue recognition concepts of fee-based services, we will discuss the qualification criteria of IFRS 17 for the VFA. Basis are certain contractual features, including the identification of the underlying items belonging to the contract. Further conditions need to be met to qualify insurer’s share in the surplus as (variable) fee. Other contractual features like inheritance and mutualisation may add complexity to the measurement of the cash flows under a contract and their effect will be explained. Changes of the overall variable fee expected to be received under the insurance contracts influence the subsequent measurement of the Contractual Service Margin, the key difference of the VFA to the general model. The explanation of those differences will be the main part of the afternoon. However, the web session cannot focus on consequences and solutions for specific jurisdictions.

The language of the web session will be English.

Stefan Engeländer
Stefan accompanied the IASB insurance project from 1998 onwards at the DAV, IAA and KPMG. Since 2000, Stefan is responsible in KPMG for actuarial issues of IFRS insurance accounting. He is member of the Insurance Accounting Committee of the IAA and the respective working party of the DAV.