chapter 2

lawtsmlawtsm
edited September 2022 in CIA.IFRS17-IC

I'm rather confused as to what are the key learnings from chapter 2.

1) In estimating future cash flows under GMA, are we only interested in cash flows that can be directly attributed to the insurance contract?
"Only Cash flows that can be directly attributed to the contract and are generated due to the existence of the contract should be included in the FCFs."
"Also, I recall under GMA, LRC = FCF + CSM."

2) There's also mention of 'internal costs'. Is insurance acquisition cash flow (part of internal cost?) part of FCF?
However, is is also mentioned
"We also need to include cash flows that are not directly attributable to individual contracts or group of insurance contracts within the portfolio such as direct payments related to commissions and underwriting costs."
Does this mean insurance acquisition cash flow is not necessarily part of FCF?

Comments

  • Staff-T1Staff-T1

    1) Yes that is correct
    2) Insurance acquisition costs should be past of internal cost. It will be part of the FCF as long as it is directly attributable to the contract. A portion of the insurance acquisition cash flows would be considered in the estimate of FCFs, but not all.
    That section of the wiki you are highlighting is explaining what constitutes an acquisition cash flow not the FCF

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