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Technical Resources
This webpage contains pronouncements, guides and articles that are relevant to HKFRS 17 Insurance Contracts.
For more details on our events and other activities to support implementation of HKFRS 17, click here.
Additionally, please see a list of the Institute’s upcoming training for HKFRS 17 here.
Effective Date
HKFRS 17 is effective for annual reporting periods beginning on or after 1 January 2023. If an entity applies HKFRS 17 earlier, it shall disclose that fact. Early application is permitted for entities that apply HKFRS 9 Financial Instruments on or before the date of initial application of HKFRS 17.
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Amendments to IFRS/HKFRS 17
In May 2017, the International Accounting Standards Board (IASB) issued IFRS 17 Insurance Contracts. The HKICPA's Financial Reporting Standards Committee (FRSC) approved HKFRS 17 Insurance Contracts in December 2017.
In June 2019, the IASB issued the ED Amendments to IFRS 17 (the IASB ED), which introduced targeted amendments to IFRS 17 designed to address issues raised during the implementation of the Standard. Following redeliberations during late 2019 and early 2020, the IASB finalized and issued the amendments to IFRS 17 in June 2020.
The amendments to IFRS 17 provide, among other things, to:
- Defer the effective date from 1 January 2021 to 1 January 2023.
- Provide scope exclusions for credit card contracts and loan contracts.
- Allocate acquisition costs to expected contract renewals.
- Attribute profit (contractual service margin) to service relating to investment activities.
- Extend applicability of the risk mitigation option.
- Reduce accounting mismatches for reinsurance.
- Simplify balance sheet presentation.
- Provide additional transition relief.
More information about these amendments can be found at the IASB’s website.
The Institute issued an Invitation to Comment on the IASB ED on 27 June 2019, with comments due by 19 August 2019. The Institute undertook significant outreach activities and developed its views through its Financial Reporting Standards Committee and considering feedback from stakeholders.
The Institute’s comment letter in response to the IASB ED was submitted on 25 September and can be found at the Institute’s website.
In October 2020, after robust due process, the Institute’s Financial Reporting Standards Committee finalized endorsement of, and issued, equivalent Amendments to HKFRS 17.
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Affected standards
Supersedes HKFRS 4 Insurance Contracts.
Why do we need a new Standard?
HKFRS 4 Insurance Contracts was an interim standard that allowed entities to use a wide variety of accounting practices for insurance contracts, reflecting national accounting requirements and variations of those requirements.
The differences in accounting treatment across jurisdictions and products made it difficult for investors and analysts to understand and compare insurers’ results. In addition, some previous insurance accounting practices permitted under IFRS 4 did not adequately reflect the true underlying financial positions or the financial performance of these insurance contracts. As a result, most stakeholders, including insurers, agreed on the need for a common global insurance accounting standard even though opinions varied as to what it should be.
HKFRS/IFRS 17 aims to address these issues by making insurers’ financial statements more useful and insurance accounting practices consistent across jurisdictions.
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