Ind AS 104, Insurance Contracts: The objective of Ind AS 104 is to specify the financial reporting for insurance contracts by any entity that issues such contracts (described as an insurer). In particular, this Ind AS requires:
- limited improvements to accounting by insurers for insurance
- disclosure that identifies and explains the amounts in an insurer’s financial statements arising from insurance contracts and helps users of those financial statements understand the amount, timing and uncertainty of future cash flows from insurance
Ind AS 104An insurance contract is a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.
- prohibits provisions for possible claims under contracts that are not in existence at the end of the reporting period (such as catastrophe and equalisation provisions).
- requires a test for the adequacy of recognised insurance liabilities and an impairment test for reinsurance
- requires an insurer to keep insurance liabilities in its statement of financial position until they are discharged or cancelled, or expire, and to present insurance liabilities without offsetting them against related reinsurance
- measuring insurance liabilities on an undiscounted
- measuring contractual rights to future investment management fees at an amount that exceeds their fair value as implied by a comparison with current fees charged by other market participants for similar services.
- using non-uniform accounting policies for the insurance contracts of
- the amounts in the insurer’s financial statements that arise from insurance
- the nature and extent of risks arising from insurance