OSFI Provides Update on Implementation of IFRS 17 in Canada
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts. The update reflects the impact of COVID-19 on the IFRS 17 Project, including the IASB deferral of the IFRS 17 effective date to January 01, 2023. In a statement from the Superintendent on July 13, 2020, OSFI had announced that it would gradually restart policy development work, which was put on hold due to COVID-19 pandemic, in the Fall of 2020; this includes policy development work on the IFRS 17 Project. In this regard, the deadline for consultation on IFRS 17 Insurance Returns period has been extended to August 31, 2020. Furthermore, the IFRS 17 semi-annual progress reporting submission requirement will resume beginning September 30, 2020. Directed consultations on capital tests, including conducting quantitative impact study exercises, will also resume beginning in the Fall of 2020.
IASB had issued, on June 25, 2020, certain amendments to IFRS 17, including deferral of the effective date of the standard to January 01, 2023. Thus, OSFI has announced that it intends to finalize the 2023 guidelines for Life Insurance Capital Adequacy Test (LICAT), Minimum Capital Test (MCT), and Mortgage Insurance Capital Adequacy Test (MICAT) in 2022 to align implementation with the new IFRS 17 effective date. The letter also states that once the Canadian Accounting Standards Board incorporates amendments to IFRS 17 into the CPA Canada Handbook, OSFI will revise its Accounting Advisories on IFRS 17 and deferral of IFRS 9. It will also update the timeline for the key milestones communicated in its June 27, 2018 letter accordingly. In the letter that was published on June 27, 2018, OSFI had communicated to federally regulated life and property and casualty insurers its plans for adapting the insurance capital guidance for IFRS 17. OSFI encourages insurers to continue their efforts toward implementing IFRS 17 and to use the additional time provided by IASB for testing and quality assurance purposes. OSFI will continue to work with the industry and key stakeholders to support a robust IFRS 17 implementation.
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Keywords: Americas, Canada, Insurance, Insurance Contracts, COVID-19, IFRS 17, Deferral of Effective Date, Reporting, IFRS 9, LICAT, MCT, MICAT, OSFI, IASB
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