LRC Formula under PAA
IFRS 17 - 1 has LRC formula
IFRS 17 has LRC formula
DAC = deferred acquisition cost -- right?
Could you please confirm if deferred acquisition cost = insurance acquisition cash flows or I am missing something in between?
Thanks!
Comments
Additionally, could you please confirm if this is not yet updated?
Thanks!
Yes, DAC = insurance acquisition CF. For your second question, the formula for PAA is correct. At time 0, UEP = Premiums Received and premiums receivable = 0.
Would the formula still be correct if its not at Time 0?
Wouldn't this contradict not at time 0?
Shouldn't the battle card just be updated so that it's just
LRC = (unearned premium) – (insurance acquisition cash flows)
I think its better to have a full understanding of how to calculate the PAA estimate at time = 0, and time =/=. For example, if we are interested in the PAA estimate at time 0, are not provided UEP and the only formula we know is PAA = UEP - DAC, we will not know how to proceed.