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Educational Note: IFRS 17 Market Consistent Valuation of Financial Guarantees for Life and Health Insurance Contracts

Publication date: 30-06-2022

Version: Current

Language available: Bilingual

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The Committee on Life Insurance Financial Reporting (CLIFR) has prepared this educational note to provide guidance related to the completion of a market consistent valuation for insurance contracts with financial guarantees within the scope of the International Financial Reporting Standard (IFRS) 17.

The educational note is structured in five sections. Section 1 introduces the content presented in this educational note. Section 2 discusses the use of stochastic modelling with an emphasis on expected practices for the IFRS 17 valuation of insurance contracts with financial guarantees. Section 3 outlines how stochastic scenarios can be determined such that they replicate market observable prices, plus potential methodologies to estimate market prices when they are not observable. Section 4 discusses adjustments (e.g., liquidity adjustments, etc.) that may be made to reflect the differences between market instruments and the financial guarantees within insurance contracts. Section 5 outlines additional items with a specific focus on segregated funds.

Categories: Practice

Types: Educational notes

Topics: Life insurance

Pages: 34

Format: PDF

Accession no.: 222073