APRA published a letter informing regulated insurers about its planned response to the issuance of standards on AASB 16 Leases (AASB 16) and AASB 17 Insurance Contracts (AASB 17). These two standards were issued by the Australian Accounting Standards Board (AASB). The letter is intended for all general insurers, life insurers, and private health insurers.
APRA recognizes, in its letter, that AASB 17 is a complex standard and potentially affects insurers in different sectors in different ways. Consequently, APRA intends to seek information from a number of insurers from each sector to better understand the impact of AASB 17 on their operations. As part of that outreach activity, APRA also intends to seek information on the impact of accounting standard AASB 16 on insurers. APRA does not intend to alter its prudential or reporting framework for either AASB 17 or AASB 16 until the impact is better understood and expects insurers to maintain their APRA reporting obligations.
APRA recognizes that some entities may be considering early adoption of the AASB 17 requirements. APRA expects that these entities would analyze the impact of the new standards and contact APRA to discuss their approach to early adoption prior to proceeding. AASB 17 was issued in July 2017 and the new requirements apply to all insurers for reporting periods beginning on or after January 01, 2021. AASB 17 requires all insurance contracts to be accounted for consistently to facilitate comparisons across similar insurance companies. The requirements are designed to help users of financial statements better understand an insurer’s exposure, profitability, and financial position.
Keywords: Asia Pacific, Australia, Insurance, IFRS 17, AASB 17, Insurance Contracts, Leases, APRA
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