Excel Practice: CIA.IFRS17-LRC - LRC under PAA
Could you explain why the non-directly attributable acquisition expense does not need to be divided by the coverage period but the directly attributable acquisition expense does? Thanks!
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Could you explain why the non-directly attributable acquisition expense does not need to be divided by the coverage period but the directly attributable acquisition expense does? Thanks!
Comments
"Directly attributable" means directly attributable to the insurance contract so those costs are amortized over the coverage period. But "non-directly attributable" acquisition expenses are not specifically tied to the contract, so it wouldn't make sense to amortize them over the coverage period. (It's kind of the same idea with ALAE and ULAE - allocated versus unallocated loss adjustment expenses.)