Lindbergh/Odomirok 24: IFRS

Question 1

Who follows IFRS

Answer 1

foreign insurers

US insurers not permitted to use it.

Question 2

What does IFRS17 do?

Answer 2

Improve the comparability between insurers

Improve the quality of financial information

Question 3

List 2 reasons that private companies will need to understand IFRS accounting, even if they do not follow it, in order to remain competitive:

Answer 3

1. Raising capital in a foreign market

2. Conducting transactions with an international company

Question 4

List 2 concerns that the NAIC has about using IFRS as the basis for SAP:

Answer 4

1. Transition costs

2. Complexity of reserve calculations

Question 5

Definition of an “insurance contract” under IFRS:

Answer 5

A contract under which one party accepts a significant insurance risk from another party by agreeing to compensate the policyholder if a specified uncertain future event adversely effects the policyholder.

Question 6

In the General Model, what are insurance contracts reported as the total of?

Answer 6

Fulfillment cash flows:

Contractual service margin (CSM):

Question 7

Describe the Premium Allocation Approach

Answer 7

simplification of the General Model. Insurers can elect to implement this option if it is expected to produce results that are not materially different from that of the General Model

Question 8

Describe the Variable Fee Approach

Answer 8

based on the General Model, but has additional features to account for contracts
that have direct participating features.