CIA.IFRS17-1 Flashcards
what does “onerous” mean
a contract is onerous at the date of initial recognition if there is a net outflow for the sum of:
- > FCFs
- > acquisition cash flows
- > cash flows arising from the contract at the date of initial recognition
based on IFRS17, how shall an entity, at minimum, divide a portfolio into groups
a) a group that is onerous at initial recognition (if any)
b) a group that has no significant possibility of becoming onerous (if any)
c) a group of any remaining contracts (if any)
is an entity permitted to reassess composition of groups after initial recognition
No, group composition is established at initial recognition and shall not be reassessed (altho it can change between onerous & non-onerous)
does IFRS 17 permit disaggregation of individual insurance contracts
No (usually). under IFRS 17, the lowest unit of account is the insurance contract.
in most cases, it is not permitted to disaggregate individual insurance contracts
identify components of LIC
- an unbiased current estimate of future cash flows (this is not the same as Fulfillment cash flows)
- an adjustment for discounting
- a risk adjustment
identify considerations when estimating the risk of non-performance of a reinsurer
- financial strength of the reinsurers
- history of claims and coverage disputes with reinsurers
- risk of contagion across various reinsurance arrangements
identify 3 options for grouping data when estimating the PV of future cash flows and the RA
- estimate gross & net losses then calculate the ceded as gross - net
- estimate gross & ceded losses then calculate the net as gross - ceded
- estimate net & ceded then calculate the gross as net + ceded
briefly describe the nature of actuarial input when estimating the RA
- assist in assessing risk aversion of entity
- assist in evaluating variability inherent in the insurance contracts
- assist in assessing compensation for bearing risk
- provide explanations of the process to management so they may execute their oversight role
