CLHIA Submission to IASB re Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts Exposure DraftRelease Date: 02/08/2016 Staff Reference: Noeline Simon
February 8, 2016
Mr. Hans Hoogervorst, Chairman
International Accounting Standards Board
30 Cannon Street
London, EC4M 6XH
Re: Comment letter – Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
Dear Chairman Hoogervorst,
The Canadian Life and Health Insurance Association (CLHIA) greatly appreciates the IASB's efforts to address concerns about the misalignment in the effective dates of implementing the new insurance contracts Standard and IFRS 9. We are pleased to provide responses to the specific questions posed in the IFRS 4 exposure draft on Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts.
The CLHIA is the national trade association for life and health insurers in Canada. Our members account for 99 % of Canada’s life and health insurance business and provide a wide range of financial security products such as life insurance, annuities and supplementary health insurance. Canadian life insurers operate in over 20 countries around the world with three of our members among the top 15 global life insurers by market capitalization − over 40 % of gross premiums of Canadian insurers come from their foreign operations.
We agree with and share the concerns the IASB is seeking to address with respect to the different effective dates of the new standards. To achieve the common goal of providing relief to entities where insurance activities are predominant, we believe the proposals as drafted need to be enhanced to capture all the entities that should qualify for the temporary exemption in line with the stated objective. The temporary exemption option must take into account the diverse circumstances of the entities and the impact of the mismatch in effective dates given the differences in current insurance accounting measurement around the world. One size cannot fit all.
CLHIA is of the view that the temporary exemption option is the most effective relief for most insurers, but we agree the overlay approach should continue to be available as an option...