Illustrative Guide to Accounting for Insurance Contracts

Illustrative Guide to Accounting for Insurance Contracts is a comprehensive and application-focused resource that simplifies the principles of Ind AS 117 (Insurance Contracts). Drawing upon IFRS 17 concepts and numerous practical examples, the book aims to guide readers through the complex landscape of insurance accounting?from identifying and classifying insurance contracts to advanced topics such as the General Measurement Model, Premium Allocation Approach, and Variable Fee Approach. It also discusses disclosures, transition requirements, and practical case analyses based on selected European insurers’ accounting policies and disclosures under IFRS 17.This book is intended for the following audience:

Insurance and Finance Professionals ? Accountants, controllers, actuaries, and financial managers working in or with insurance companies who need a practical, example-oriented guide
Auditors & Consultants ? Professionals engaged in auditing or advising clients on IFRS 17/Ind AS 117 compliance
Regulators & Standard Setters ? Those involved in formulating or reviewing insurance contract accounting guidelines
Students & Academics ? Scholars of finance and accounting who want a deeper understanding of insurance accounting principles and their practical implementation

The Present Publication is the Latest Edition, authored by T.P. Ghosh, with the following noteworthy features:

[Practical Focus] Emphasises practical application with 45+ illustrative examples detailing data flows and accounting entries from initial recognition to presentation in financial statements
[Comprehensive Coverage] Addresses all critical aspects of Ind AS 117/IFRS 17, including insurance contract boundaries, risk adjustment, discount rate selection, the concept of the contractual service margin, identifying onerous contracts, etc.
[Case Analyses of European Insurers] Includes in-depth reviews of IFRS 17-based accounting policies and disclosures of leading European insurance companies?such as Aegon N.V., AXA S.A., Aviva plc., Munich Re, CNP Assurances S.A., and Swiss Life
[Step-by-step Transition Guidance] Offers insights on transitioning from Ind AS 104 to Ind AS 117 and understanding the interplay with IFRS 17 requirements.
[Authoritative Authorship] Authored by Dr T.P. Ghosh?a highly respected educator and author with extensive expertise in Indian Accounting Standards, IFRS, and corporate accounting practices

The coverage of the book is as follows:

Key Principles of Ind AS 117
From scope and definitions to advanced measurement approaches
Insurance Accounting Models
Detailed examples of the General Measurement Model, Premium Allocation Approach, and Variable Fee Approach
Identification & Classification
How to distinguish insurance contracts from other financial instruments, plus guidance on separating components such as embedded derivatives
Measurement of Insurance Contract Liability
Methods for estimating future cash flows, setting discount rates, and determining contractual service margins
Onerous Contracts
Identifying and measuring loss components and handling subsequently onerous contracts
Reinsurance Contracts Held
Comprehensive illustrations of the accounting principles and interplays between underlying contracts and reinsurance
Disclosures & Transition
Best practices for financial statement presentation, plus strategies to implement Ind AS 117 with minimal disruption
Appendices
Appendix I ? Ind AS 104 offers a historical perspective
Appendix II ? Amendments introduced by Ind AS 117 to other Ind ASs

The structure of the book is as follows:

Chapter 1 | Introduction
Background of IFRS 17/Ind AS 117, objectives, scope, and scope exclusions
Illustrative case showing disclosure of IFRS 17/Ind AS 117 impact
Chapter 2 | Identifying Insurance Contracts
Meaning and scope of insurance contracts
Examples of significant insurance risk, separating components (investment, embedded derivatives), and level of aggregation
Chapter 3 | Estimates of Cash Flows
Techniques for unbiased projection of cash flows within contract boundaries
Risk adjustment for non-financial risk
Chapter 4 | Selection of Discount Rates
Guidance on determining appropriate discount rates and handling unobservable inputs
Chapter 5 | Recognition & Measurement?General Measurement Model
Detailed examples of calculating fulfilment cash flows, contractual service margin, and insurance revenues/expenses
Treatment of multi-period contracts and separation of investment components
Chapter 6 | Onerous Contracts
Identification of onerous contracts, establishment of loss components, and subsequent reversals
Chapter 7 | Premium Allocation Approach (PAA)
Conditions for using PAA, practical examples, and simplified measurement approaches for short-duration contracts
Chapter 8 | Variable Fee Approach (VFA)
Insurance contracts with direct participation features
Step-by-step illustrations of calculation and presentation under VFA
Chapter 9 | Reinsurance Contracts Held
Accounting principles and worked examples for reinsurance contracts, including discounted cash flows
Chapter 10 | Acquisition of Insurance Contracts
Treatment of acquisition costs, business combinations, and impairment assessment
Chapter 11 | Disclosures
Required disclosures under Ind AS 117 and IFRS 17, with real-world excerpts from European insurers
Chapter 12 | Transition to Ind AS 117
Retrospective, modified retrospective, and fair value approaches
Comparative information and redesignation of financial assets
Appendix I | Ind AS 104 ? A Historical Perspective
Appendix II | Amendments to other Ind ASs ? How Ind AS 117 affects existing standards