OSFI Advises on IFRS 17 Transition and Progress Report Requirements
OSFI issued and advisory for the federally regulated insurers and insurance holding companies (FRIs) to support their transition to IFRS 17 Insurance Contracts Standard (IFRS 17). The advisory is addresses the early adoption of IFRS 17 Insurance Contracts Standard (IFRS 17), accounting for financial guarantee contracts, and semi-annual progress reporting to OSFI.
IASB released IFRS 17, which replaces IFRS 4, in May 2017. The Canadian Accounting Standards Board endorsed IFRS 17, which is now incorporated into Part I of the CPA Canada Handbook—Accounting. After reviewing several factors (such as consistency across insurers and operational capacity), OSFI determined that FRIs should not adopt IFRS 17 before its effective date of January 01, 2021. Disallowing adoption before January 01, 2021 implies that FRIs that are subsidiaries of deposit-taking institutions (DTIs) with an October 31 year-end will adopt IFRS 17 for annual periods beginning November 01, 2021. OSFI confirms this adoption date, having considered the complexity of implementing IFRS 17 and the size of these DTI subsidiaries relative to the regulated DTI. DTI subsidiaries with a December 31 year-end will adopt IFRS 17 on January 01, 2021.
Additionally, OSFI determined that the existing FRIs should continue accounting for financial guarantee contracts using IFRS 17. OSFI will communicate any additional reporting requirements during the application process for new entrants after January 01, 2021. OSFI will require FRIs to submit semi-annual reports outlining the progress made in preparation for IFRS 17. This advisory also sets out the OSFI expectations with respect to the timelines and content of such reports, with the first progress report being due by September 30, 2018.
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Keywords: Americas, Canada, Accounting, Insurance, IFRS 17, Insurance Contracts, Transition Timeline, OSFI
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