IFRS17 Update #2

guillam76guillam76
in CIA.FCT

In the wiki article, the statement regarding PAA is as follows:

→ There is no CSM but a Loss Component (LC), must be included for onerous contract, and this cannot be offset by future profits so careful consideration must be given to the level of aggregation in an FCT scenario.

I'm having a hard time understanding the second part of the statement and how the level of aggregation plays a role in it. Is it possible to detail this a little bit further?

Comments

  • Staff-T1Staff-T1

    It's more of thinking how to choose your level of aggregation before running your FCT. You could have cases where you'd group two groups of contracts together, such as personal property Canada wide:

    • You're an insurer who writes personal property Canada wide
    • If one of your scenarios for example considers regulation on personal property in one province (AB) that leads to a rate cap, then you could have onerous contracts in AB, but not other provinces.
    • If you do not disaggregate prior to running your FCT, you'd not be able to capture this if you are grouping contracts Canada wide
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