Insurance risk can already be significant even if the policyholder still has to opt for insurance cover in the future, but with insurance rates already specified. If commercial substance exists only in very unlikely scenarios, but the contract covers all these scenarios, then this qualifies as being significant (see IFRS 17 B18). Insurance risk is only significant if there is at least one scenario with commercial substance where the compensation paid by the insurer is significant, disregarding the likelihood of that scenario. Significant insurance risk – An insurance contract is only in the scope of IFRS 17 if it transfers a significant amount of insurance risk to the entity (or reinsurer).
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