International accounting standard on insurance contracts, effective since 2023, overhauling the measurement of liabilities and profit.
IFRS 17 is the international accounting standard governing the recognition of insurance contracts, effective in 2023 in replacement of the transitional IFRS 4 standard. It requires a measurement of insurance liabilities based on the present value of future cash flows, a risk adjustment and a contractual service margin representing the profit not yet earned, spread over the cover period. Its aim is to harmonise and make comparable the accounting of insurers, long marked by heterogeneous national practices. The standard introduces several measurement models depending on the nature of contracts and profoundly changes profit recognition, smoothing the emergence of profit rather than recognising it at underwriting. For insurers, its implementation represented a considerable systems, data and steering project. For the analyst, it changes the reading of accounts: the contractual service margin becomes a key indicator of a portfolio's stock of future profit.
Under IFRS 17, an insurer no longer recognises its entire margin at the underwriting of a long contract, but spreads it through the contractual service margin over the cover period.
IFRS 17, norme IFRS 17, contrats d'assurance IFRS