EFRAG's Endorsement Advice on Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4)

On 12 September 2016, the IASB issued Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments to IFRS 4) ('the Amendments'), which was initially issued as an exposure draft ED/2015/11 in December 2015.

The Amendments aim to address the concerns related to the misalignment of the effective dates of IFRS 9 and the future insurance contracts Standard.

EFRAG has submitted its Endorsement Advice relating to the Amendments for use in the European Union and European Economic Area.

EFRAG assesses that, in the specific circumstances arising from the misalignment of effective dates referred to above, the Amendments meet all technical endorsement criteria of the IAS Regulation. EFRAG further assesses that the Amendments address the main concerns of entities whose activities are predominantly related to insurance, who are the most significantly affected by the issues arising from the misalignment of the effective dates of IFRS 9 and the forthcoming insurance contracts Standard. On that basis, EFRAG assesses that adopting the Amendments would be conducive to the European public good.

EFRAG further considers that the Amendments address many of the concerns raised in its endorsement advice on IFRS 9 but do not address the cost concerns of many entities undertaking insurance activities that are not predominant insurers. EFRAG could not exclude that the Amendments could create a competition issue. However, EFRAG is not in a position to conclude on whether this is material from an economic perspective.

The Endorsement Advice Letter to the European Commission can be found here.

EFRAG has also updated its Endorsement Status Report, which can be downloaded here on EFRAG's web page.