IFRS17 Measurement of Property & Casualty Insurance Contracts

Ward, B. H. (2021). IFRS17 Measurement of Property & Casualty Insurance Contracts. Retrieved from Casualty Actuarial Society E-forum: https://www.casact.org/sites/default/files/2021-05/Ward_B_IFRS17Measurement.pdf

45 Pages Posted: 18 May 2023

See all articles by Brett Ward

Brett Ward

Insurance Australia Group

Date Written: May 01, 2021

Abstract

IFRS 17 introduces the concept of a risk adjustment that compensates insurers for the uncertainty about the amount and timing of the cash flows that arise from non-financial risks. The method for its calculation is not prescribed and several options are emerging, including value at risk and cost of capital. This paper recalls (Myers & Cohn, 1981) to provide a cost of capital approach that has desirable characteristics including relative ease of implementation, risk adjustment margins that are fully diversified and additive from granular levels, alignment with pricing bases and recognition of a uniform return on allocated capital.

Keywords: IFRS17, risk adjustment

JEL Classification: G22

Suggested Citation

Ward, Brett, IFRS17 Measurement of Property & Casualty Insurance Contracts (May 01, 2021). Ward, B. H. (2021). IFRS17 Measurement of Property & Casualty Insurance Contracts. Retrieved from Casualty Actuarial Society E-forum: https://www.casact.org/sites/default/files/2021-05/Ward_B_IFRS17Measurement.pdf, Available at SSRN: https://ssrn.com/abstract=4437676

Brett Ward (Contact Author)

Insurance Australia Group ( email )

201 Sussex Street
Sydney, New South Wales 2000
Australia

HOME PAGE: http://www.iag.com.au

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