IFRS 4 : Insurance Contracts

???????This Standard provides guidance on #accounting of #insurance #contracts issued by an entity, Reinsurance Contracts issued or held by the entity & most of the financial guarantee contracts. It doesn’t require changes in existing accounting practices for insurance contracts but focused on enhanced disclosure requirements for such contracts.

It adds requirement of testing adequacy of insurance liabilities and impairment testing of reinsurance assets. As per IFRS 4, Insurance companies can’t book a liability for insurance claims which have not been incurred.

Entities need to show the insurance liabilities in financial statement, until they are discharged, cancelled or expired. Insurance liabilities can’t get set-offed against related Re-insurance assets. As an exception - This standard allows some existing practices to be carried like – Undiscounted measure of insurance liabilities, valuation practices and different accounting policies for insurance liabilities of subsidiaries.