No Discounting For LIC Criteria

cornedov

Regarding not discounting LIC under IFRS17 when incurred date of claims and cash flows are within a year, the source reads:

" Discounting of the LIC: In applying the PAA, the time value of money and the effect of
financial risk can be ignored in measuring the LIC if the LIC cash flows are expected to be
paid or received in one year or less from the date the claims are incurred."

When would we apply PAA to LIC? I was under the understanding that PAA was strictly for LRC

Staff-T1

PAA LIC = GMA LIC. There is no different method to calculate the LIC

sidkiriya

The statement you mentioned is saying: if there is any GoC with PAA at initial recognition, for that GoC's expired portion at any subsequent measurement, if payment date of claims are expected to be within 12 months of the claim incurred date (which would have been between initial recognition and subsequent measurement date), then discounting is optional.

If the GoC was not PAA at initial recognition, meaning accounted under GMM then, the subsequent measurement LIC would definitely had to be discounted regardless the timing diff between paid and incurred dates less than 12 months.