Questions regarding IFRS17.IC

bicbicbicbic
in CIA.IFRS17-IC

Hi, I have several understanding questions regarding this standard.

  1. why would insurer write a contract that is onerous at initial recognition?
  2. When determining groups for PAA, contracts in portfolio are not onerous at initial recognition, why is there no CSM under PAA?
  3. Is GMM and GMA interchangeable?
  4. For considerations for when should contracts be grouped together, the first bullet point is saying when rights and obligations are different when viewed individually vs collectively. In this case, why should they be grouped together?

Thanks,

Comments

  • Staff-T1Staff-T1
    1. Say you are writing Auto insurance in AB. Bodily injury coverage may be onerous but Accident Benefits coverage is profitable. Both are mandatory coverages so you have to offer BI. Or the company sees that an onerous group has a positive customer lifetime value. Also, competitive reasons, strategy, growth, etc ~ Many reasons tbh
    2. PAA is a simplification which is why there is no CSM
    3. Yes
    4. The question is considerations for when they should be grouped together, not the reasons contracts should be grouped together. You'd take into account if rights and obligations are different when viewed together or apart. If they are, you would not group them together
  • bicbicbicbic

    Thanks a lot. It makes sense.

  • evelynleoevelynleo

    Regarding points number 4, to avoid further confusion, it might be a good idea to change the question wording in this battle quiz.

  • Staff-T1Staff-T1

    Yup thanks for pointing that out

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