The Government Actuary's Department (GAD) has been involved in the development of new IFRS 17 application guidance. This is for accounts within scope of the government financial reporting manual (FReM.)
The International Financial Reporting Standard 17 (IFRS 17) Insurance Contracts is the new accounting standard for insurance contracts. It replaces IFRS 4 Insurance Contracts for accounting periods starting on or after 1 January 2023.
It will be applied by HM Treasury in the FReM from 1 April 2025 (with limited options for early adoption.) The underlying aim of IFRS 17 is to make reporting of risk transfer contracts more comparable between different entities.
Scope and data
GAD helped with the development of the guidance, as part of HM Treasury's working party by working through the requirements.
We had previously engaged with some government departments and arm's-length bodies to help consider scope and potential data requirements for the new style of calculations.
GAD's services include helping departments place a value on risks which are difficult to quantify, such as potential future liabilities which may include a contractual transfer of risk.
Actuarial advice
Actuary Nick Clitheroe is GAD's lead on IFRS 17. He said: "We were part of the working party contributing our expertise to this. This new guidance will be an important development for public sector organisations.
"IFRS 17 Insurance Contracts is described as a complex accounting standard and organisations are advised in the guidance to seek actuarial advice. GAD's skills include analysis and advice around probability weighted cashflows, contingent liabilities and risk adjustments."
