CMF published a regulatory proposal on the implementation of IFRS 17 on insurance contracts in Chile. The proposed regulation is intended to modernize the rules on “technical reserves,” aligning them with the best international practices and principles in this field. IFRS 17 seeks to improve comparability among information from different companies and to ensure that technical liabilities on the balance sheet of the insurance companies are valued at market value. The consultation period will be open until May 12, 2021. CMF also announced that it will soon send a notice, along with instructions, to the insurance companies, to conduct its second impact assessment on the implementation of IFRS 17.
The implementation of IFRS 17 is expected to improve the transparency of information reported by insurance companies in their financial statements. It is also expected to ensure that companies provide relevant information, which accurately represents the insurance contracts, by establishing the principles for recognition, measurement, presentation, and disclosure with respect to the said contracts. The proposal considers both the experience of other jurisdictions that serve as a reference for Chile and the international recommendations on the constitution of technical reserves. The following are the key elements addressed in the proposed regulation:
- Implementing IFRS 17 and replacing the current standard, which is mainly based on IFRS 4
- Establishing main principles and models provided by IFRS 17, in addition to specific instructions that companies must follow to measure their technical liabilities
- Establishing special considerations applicable to the national market, specifically for life annuities, disability and survival insurance, and the earthquake catastrophe reserve
- A public consultation requiring a statement from the insurance industry on the aspects highlighted by CMF as relevant
Comment Due Date: May 12, 2021
Keywords: Americas, Chile, Insurance, Insurance Contracts, IFRS 17, IFRS 4, Disclosure, CMF
Previous ArticleHKMA Leads Cross-Border Resolution and Green Finance Groups in Asia
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.