On 18 May 2017, the IASB issued IFRS 17 Insurance Contracts, which replaced the current IFRS 4 – Insurance Contracts, effective until the end of 2022.
The aim of the new standard is to introduce completely new, uniform principles for the measurement of insurance contracts, ensuring greater comparability of financial statements between different insurers, as well as providing a number of new disclosures for users of the financial information.
IFRS 17 introduces new principles for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts, as well investment contracts with discretionary participation features The model for the measurement of a group of contracts in accordance with IFRS 17 is based on estimates of the present value of future fulfilment cash flows related to future and past service allocated to the group, and on the contractual service margin representing unearned profit.
The most important portion of operating profit within the PZU Group’s business of insurance is the insurance service result. In accordance with IFRS 17, the insurance service result covers:
- the amount of insurance revenue reflecting the consideration to which the PZU Group is entitled in exchange for services provided in the period and
- the insurance service expenses, which comprises incurred claims, amortization of insurance acquisition cash flows, changes that relate to past service, and losses on groups of onerous contracts.
Detailed accounting and estimates applied to measure insurance contracts and reinsurance contracts are presented in Section 6.3.2.