IFRS 17

Understanding
Insurance Contracts
Gap - Analysis
Asosiasi Asuransi Umum Indonesia
(AAUI)
8 November 2021

Dr.Ludovicus Sensi W, CPA, CA

CTPRIMA
Agenda
1 Persiapan Implementasi IFRS17
 Surat OJK – Persiapan Implementasi IFRS 17
 Understanding Gap analysis
2 Insurance Value Chain
3 Complexity of IFRS 17
 Timeline
 Implication to Management and Stakeholders
 Improve financial reporting
 Operational Implications
 Key focus area of the standard
 Overview General Model
 Insurance Risk VS Non-Insurance Risk
 Critical IFRS 17 Components
 Measurement Model
 Building Block Approach
Agenda
3 Complexity of IFRS 17
 Technical Requirement
 IFRS Requirement
 Changes In Fs Presentation And Disclosure
4 Actuarial Aspect
 Measurement Models
 Separated Component
 Level Of Aggregation
 Expected Cash Flows
 Discount Rate
 Risk Adjustment
 Exercise
 Actuarial Gap analysis
Agenda
5 Impact of IFRS 17 for IT
 IT Systems Requirements
 IFRS 17 IT Gap Analysis
6 Financial Accounting and Reporting Aspects
 How Does IFRS Impact?
 Business Process and Control
 Accounting Policy Framework
 Recognition
 Measurement
 Presentation
 Disclosure
 Chart Of Account
 IFRS 17 Financial Accounting Gap Analysis
REFERENCE

 Insurance Contracts Accounting Standard AASB 17- Issued by Actuary Institute September 2017
 IFRS 17 Challenges, Seminar ISEA September 2021, Presented by Palti FTH Siahaan
 IFRS 17 for life Insurers June 2018– issued by Ernst & Young Global Limited, a UK Company
limited.
 IFRS 17 Audit Committee Training Great Eastern Holdings Limited and Subsidiaries July 2019 -
issued by Ernst & Young Global Limited, a UK Company limited
 IFRS 17: The First Truly International IFRS July 2017– issued Sue Lloyd – IASB
 IFRS 17: The First Truly International IFRS – issued Mehul Dave – Director of Actuarial & Insurance
Solution, Deloitte Singapore.
 KPMG Insurance Contract July 2020 – Illustrative Disclosure for Insurer Guide to annual financial
statement IFRS 17 and IFRS 9, September 2020 Edition
 KPMG Insurance Contract First Impression: 2020 Edition IFRS 17
 Angie Ng - Head of Technology & Software Insurance Consulting And Technology Willis Towers
Watson, Singapore
 IFRS 17 Implementation by General Insurers in Singapore – Issued by Mehul Dave, Chair of IFRS 17 GI
Working Party, 17 January 2020.
 PwC Insurance Contract June 2021, An illustration Financial statements presentation and
disclosure.
Section 1
Persiapan Implementasi IFRS 17

• Surat OJK – Persiapan Implementasi

IFRS 17
• Understanding Gap analysis

CTPRIMA
1 PERSIAPAN IMPLEMENTASI IFRS 17 - SE OJK NO. S-893/NB.211/2021 - 9 SEP 2021

■ Dalam rangka memastikan persiapan penerapan PSAK 74 berjalan dengan baik maka pada
tahun 2021 diharapkan seluruh Perusahaan Asuransi dan Perusahaan Reasuransi telah
melakukan kajian terhadap kebutuhan infrastruktur dan hal pendukung lainnya
dibandingkan dengan ketersediaan/kesiapannya (Gap Analysis). Kajian tersebut juga
dilengkapi dengan analisis dampak penerapan PSAK 74 berdasarkan karakteristik produk
dan portofolio polis perusahaan serta rencana pemenuhan gap dimaksud.

People Process Technology

1 PERSIAPAN IMPLEMENTASI IFRS 17 - SE OJK NO. S-893/NB.211/2021 - 9 SEP 2021

■ Berkaitan dengan hal tersebut, kami minta Saudara untuk menuangkan hasil analisis
tersebut dalam Position Paper dan menyampaikannya kepada OJK. Penyampaikan position
paper tersebut kami harapkan dapat diterima OJK sebelum tanggal 31 Desember 2021.
Perlu Strategi jangka Panjang:
1 UNDERSTANDING GAP ANALYSIS

Pada umumnya pendekatan dan metodologi yang digunakan dalam Gap analysis adalah dengan (i) melakukan
diskusi dan tanya jawab (define future state), (ii) review dokumentasi atas sistem yang berjalan (review
current state), (iii) membandingkan dengan persyaratan (requirement) IFRS 17 dan IFRS 9 (pratical best
practices), (iv) menganalisis kesenjangan (Gap Analysis) dan (v) memberikan saran dan rekomendasi .

Define Future Review Current Outline

Identify Gap Resolutions &
State State Timeline
1 2 3 4

Recomendation

5
Section 2
Insurance Value Chain

CTPRIMA
2 INSURANCE VALUE CHAIN – PRODUCT SPECIFICATION

Global Insurance Industry Insight - McKinsey

Company's Margin, 5%

Cost of Admin, 31%

Reserve & Claims, 60%

Investment Profit 4%
2 INSURANCE VALUE CHAIN – COST OF INSURANCE

Global Insurance Industry Insight - McKinsey

Section 3
Complexity of IFRS 17

CTPRIMA
3 TIMELINE

IFRS 9 Effective date

Predominant
No Yes
insurance activities?
IFRS 9

Overlay First IFRS 9 annual Deferral

approach? financial statements Approach

2017 2018 2019 2020 2021 - 2022 2023 - 2025

Implementation period Reporting

IFRS 17

IFRS 17 IFRS 17 start IFRS 17 effective date

standard issued of comparative period 1 Jan 2023 and 1 Jan
2025 for Indonesia
3 IMPLICATION TO MANAGEMENT AND STAKEHOLDERS

Accounting

IT Systems
Actuarial &
Processes

IFRS 17
/ IFRS 9

KPIs Human
Resources
3 IMPROVE FINANCIAL REPORTING
Provides up-to-date market consistent Underwriting revenue and expenses are
information of obligation including recognised over time in comparable way
value of options and guarantees to other non insurance business

Single
Reflects time value of money
accounting Provides separate information about the
approach investment and underwriting performance

Assumptions used in the valuation of insurance contact

liabilities reflect the characteristics of the insurance contract
rather than the risk related to asset / investment activity
3 OPERATIONAL IMPLICATIONS
The big picture
2. Performance Management
► Changes in MI reports and KPI‟s 3. People
1. Policy
► Planning, budgeting and forecasting ► Training
► New accounting policies/procedures
and control documentation processes need to be adjusted ► Cross functional collaboration (especially
► VBM, scorecards and incentive schemes for Finance & Risk)
► IFRS 17 methodology guidance and reporting
► Project resourcing & budget
instructions
► Managing change fatigue
► GL Chart of Accounts changes and account
mappings Performance
► Assumptions setting (modelling) Policy Management People 4. Organization
► Investment policy changes (TFRS 9) ► Roles and responsibilities between
Actuarial and Finance
departments
► Technical Provisions Assumptions/
Organization
Expert Judgement Committee
5. Data ► Impact on outsourcing contracts
► Refinement, upgrading, conversion and
migration of (complex) actuarial
valuation models
Data Process Technology 7. Technology
► New financial reporting data ► Core systems, investment system,

requirements (input/output) actuarial systems, pricing systems,

► Data reconciliations at different levels etc.
► Data quality, storage and archiving ► Posting logic/engines
6. Processes ► General Ledger, consolidation and
► Data security & controls
► Materiality concepts/guidelines
► Data governance and master data reporting systems
► Updating closing and reporting processes,
management ► System interfaces
planning processes, actuarial processes, risk ► Current system capacities &
management etc. capabilities (agile technology)
► Internal and external reporting
► New functionalities/features
templates including group reporting
packages
► Internal controls and audit trail
3 KEY FOCUS AREAS OF THE STANDARD

(38-39)

(29-32)
(72)

(40-46)
(37)

(47-52)

(71)
(1-9)

(83-86)
(36) (74-77)

(33-35)

(80-92)
(10-13)

(97-116)

(87-92)
(53-59)
(14-24)

(117-120)
(60-62)
3 OVERVIEW OF GENERAL MODEL

Release of contractual
service margin
Contractual
service margin
Change in estimates

Interest accretion at
inception rate
Profit or loss (insurance

+ service result)

Experience
adjustments
Fulfilment cash flows

Risk adjustment

+ Release of risk
Probability weighted
adjustment
discounted expected
present value of cash
flows
Time value of money Profit or loss and/or other
and other assumptions comprehensive income
related to financial risk (insurance finance income
or expenses)
Insurance Contract Liability
3 INSURANCE RISK VERSUS NON-INSURANCE RISK

Insurance risk, as defined – „Risk, other than financial risk, transferred from the holder of
a contract to the issuer. Insurance risk is deferent with financial risk.

Insurance Risk Financial Risk

 Death or survival • Interest rates
 Injury • Financial instrument prices
 Illness • Currency exchange rates
 Disability • Indices of prices or rates
 Loss of property due to damage/theft • Credit ratings/credit indices
 Failure of a debtor to make a payment when it is due • Commodity prices
3 THE CRITICAL IFRS 17 COMPONENTS

1 Definition of Insurance contracts

2 Combination / unbundling of insurance contracts

3 Separating non-insurance components

4 Recognition of insurance contracts

5 Insurance acquisition cash flows THE CRITICAL IFRS 17

COMPONENTS
6 Contract modifications and accounting for derecognition

7 Level of Aggregation (LoA)

8 Onerous contracts

9 Contract Boundaries
3 THE CRITICAL IFRS 17 COMPONENTS

10 General Measurement Model (GMM)

11 Discount Rate

12 Risk adjustments for non-financial risk

13 Contractual Service Margin (CSM)

14 Subsequent Measurement

15 Premium Allocation Approach (PAA) THE CRITICAL IFRS 17

COMPONENTS
16 Accounting for reinsurance contract held – recognition

17 Accounting for reinsurance contract held - measurement

18 Presentation and disclosures

19 Transition
3 MEASUREMENT MODELS
3 BUILDING BLOCK APPROACH
18

 Deferred profit absorbs assumption changes for

future coverage (“Unlocking”)

 Profit measured and reported based on the

delivery of the “insurance coverage service”

 The measurement of insurance contracts will

consist of a number of explicitly reported balance
which include BEL, RA, and CSM

 Discount rates based on market interest rates

(currency, duration, liquidity and asset –
dependency)

 Need to group contracts by portfolio, year of sale

and one of the three possible profitability levels

Page 24
3 TECHNICAL REQUIREMENTS OF IFRS 17
Underwriting result
Current profit and finance result will
profiles will be have a new „feel‟ and
impacted giving rise to presentation. New KPIs,
potential strategic strategy, incentives and
or business decisions. education are required
Longer tail and riskier Presentation and disclosure as well as system
business will be more changes.
affected by the IFRS
17 valuation model. Level of
Best estimate aggregation/ Greater rigour in
cash flow
The OCI solution onerous contract measuring and
provides a device to reporting onerous
reclassify volatility out of Simplified losses at inception.
profit or loss (P&L) due Discounting approach (PAA)
to change in yield curve. PAA is expected to
This comes at a be the measurement
potentially higher Reinsurance basis for GI Companies,
Risk adjustment measurement
operational cost. except in a small number
of possible cases,
The disclosure of the Contractual including reinsurance.
confidence interval for Transition
service margin
risk adjustment will
introduce a new level Ledger strategy,
of transparency and Acquired implementation
Unbundling approach
constrain how insurers portfolios
use margins in their and Internal MI
reserves. transition
will drive business
change –
These IFRS 17 technical requirements will with new balance sheet
significantly increase the complexity and data position needed from
volume 31/12/19.
3 IFRS REQUIREMENTS - KEY CALCULATION COMPONENTS

Contractual Service Margin

CSM  Effectively a balancing item that eliminates day one gain
 Cannot be negative except for reinsurance Risk Adjustment
Risk adjustment  Released as services are provided  Compensation the
 Adjusted to reflect impact of changes in best estimate assumptions in insurer requires for
respect of future service thereby reducing profit variability bearing uncertainty
 CSM discount rate “locked” at inception except for directly participating  May reflect diversification
within and between
business
Market- portfolios Fulfilment
 Modified “variable fee” approach for direct participation business  Disclosure of cash flows
consistent
value of cash confidence level
flows

Cash Flows Time Value of Money

 Explicit  Reflect liquidity

characteristics of cash flows
 Unbiased
 Consistent with observable
 Entity perspective
market prices
 Within contract
 Exclude factors not relevant
boundary
to the cash flows

Page 26
3 IFRS REQUIREMENTS - Contractual Service Margin Calculation Example

Page 27
3 IFRS REQUIREMENTS - GROUPING, DISCOUNT RATES, RISK ADJUSTMENT

Grouping of contracts Discount Rates

Risk adjustment principle

Page 28
3 NEW STATEMENT OF COMPREHENSIVE INCOME

Page 29
3 CHANGES IN FS PRESENTATION AND DISCLOSURE

Statement of Comprehensive Income

Insurance revenue

Net earned premiums Insurance services expense

IFRS 4
Interest, dividend and other investment income IFRSIncurred
17 claims and expense
Acquisition costs
Incurred claims and benefits
IFRS 17 Gain/loss from reinsurance
Change in provisions Insurance service result
Profit or loss Investment income
Insurance finance expense

Key Changes : Net financial result

 Two drivers of profit presented separately
Profit or loss
 Insurance revenue excludes deposits [written premiums disclosed in the notes]
Discount rate changes on insurance
 Revenue and expense are recognized as earned or incurred
liability (optional)
 Insurance finance expenses are excluded from insurance service result and are
presented (i) fully in P&L or (ii) in P&L and OCI, depending on accounting policy Total comprehensive income
3 CHANGES IN FS PRESENTATION AND DISCLOSURE

Statement of Financial Position

Assets IFRS 4
Reinsurance contract assets

Deferred acquisition costs Assets

IFRS 17 Reinsurance contract assets
Premiums receivable
Insurance contract assets
Policy loans
Liabilities
Insurance contracts liabilities
Liabilities

Insurance contracts liabilities Reinsurance contracts liabilities

Unearned premiums
Claims payable
Section 4 - Actuarial Aspect

 Separated components
 Level of aggregation
 Expected Cash Flows
 Discount Rate
 Risk Adjustment
 Exercise
 Gap analysis
4 SEPARATED COMPONENTS

Separation

Distinct
investment
components
Accounting under IFRS 17

Insurance Embedded
components derivatives, which are Accounting under IFRS 9
not closely related

Accounting under IFRS 15

Distinct performance
obligation to provide
goods and
services Accounting under IFRS 17, disaggregation for presentation in
Non-distinct income statement notes
investment components

1 Disaggregation is the exclusion of an unseparated investment component from

insurance contracts revenue
Disaggregation1
4 LEVEL OF AGGREGATION

1 Portfolio = A group of contracts

Portfolio (a) subject to similar risks
(b) managed together

2 Permitted to group only contracts

At Contract Inception

Cohorts issued no more than one year apart

3
Contracts not onerous at inception

Other profitable No significant

Onerous
contracts possibility of Assessment based on:
contracts at
becoming (a) Likelihood of changes in estimates
inception
onerous which, if they occurred, would
result in the contracts becoming
onerous
(b) Using internal information
about changes in estimates

A loss is
CSM is recognized and released as
recognized in the
insurance service is provided
P&L at inception

Assessment is done at contract inception – no subsequent re-assessment

Page 34
4 LEVEL OF AGGREGATION GROUPING OBJECTIVES

Portfolio 1 Entity divides each portfolio into groups

Credit insurance  contracts issued within the same year
 information about the contracts’ resilience
  consistent with internal reporting
 exemption for regulatory pricing
 group not reassessed after initial recognition

Contracts that at initial recognition Unearned profit is

Group A recognised as part
Profitable  have no significant possibility of
contracts becoming onerous subsequently, if any of the liability and
is released as
Group B insurance services
Other profitable contracts, if any are provided

Onerous Group C Contracts that are onerous at initial A loss is
contracts  recognition, if any recognised in P&L
4 BUILDING BLOCK APPROACH - FULFILMENT CASH FLOWS

 The estimates of CFs used to determine the fulfilment CFs shall include all cash inflows and outflows that
Contractual relate directly to the fulfilment of the portfolio of contracts:
service  Current and explicit (separate from discount rate and risk adjustment)
margin  Market variables as consistent as possible with observable market prices
 Incorporate all available information in an unbiased manner (including trends)
Risk  Include all CFs within contract boundary
adjustment

Coverage period
Time value
of money
Cash inflows

Premium Premium

Cash flows within contract boundary Time

Future cash
flows Claims payments
Cash outflows

Claims including claim

Other payments handling cost
expenses/ taxes
Acquisition
costs

Page 36
4 EXPECTED CASH FLOW - Expected Cash Flows of a Group of Insurance Contracts

Cash Flow Examples Cash Flow Examples

Premiums and any other costs • Premium adjustments Claim handling costs – • Legal and loss adjusters’ fees
specifically chargeable to • Instalment premiums investigating, processing • Internal costs of investigating
the Policyholder • Any additional cash flows and resolving claims • claims and processing
that result from those claims payments
premiums Policy administration and • Costs of billing premiums
Payments to, or on behalf of • Incurred claims that have not maintenance costs • Costs of handling policy
policyholder yet changes (e.g. conversions)
been paid (IBNP) • Recurring commissions
• Incurred claims that have not expected to be paid to
yet been reported (IBNR) intermediaries if the
• Future claims policyholder continues paying
• Payments that vary premiums within the
depending on returns on boundary.
underlying items Allocation of fixed and variable These are allocated to
Costs of providing benefits in kind • Replacement of stolen articles overheads directly contracts or groups using
attributable to fulfilling methods that are systematic,
Payments in a fiduciary • Payment of death duties insurance contracts rational and consistently
capacity to meet the or inheritance tax applied to all costs with
policyholder’s tax obligations similar characteristics.
Potential cash inflows from • Salvage and subrogation These include accounting,
recoveries on claims, as long as human resources, IT and
they have not been recognised support, building depreciation,
as a separate asset rent, maintenance and utilities.
Insurance acquisition cash flows • Acquisition Cost Cost of investment activity Costs of managing
attributable to the portfolio certain investments
4 BUILDING BLOCK APPROACH - TIME VALUE OF MONEY

Top-down approach Adjust for other characteristics of the insurance contracts

Current market rates of returns: either of own if necessary
asset portfolio or a reference portfolio

Illiquidity premium: Adjust for liquidity characteristics of

Adjust for risks that are not relevant to the the insurance contracts
insurance contract, e.g., default risk, market risk

Bottom-up approach
Adjust for duration differences if necessary (No need to Risk-free yield curve with similar characteristics
adjust for the difference due to liquidity) (e.g., duration, currency)
4 DISCOUNT RATE - Discounting to Reflect the Time Value of Money
IFRS 17 does not prescribe a single estimation technique to derive discount rates. However, the standard does specify that a „top-
down‟ or „bottom-up‟ approach may be used. In theory, for insurance contracts with cash flows that do not vary based on the
performance of the underlying items, both approaches should result in the same discount rate, although differences may arise in
practice. The rate shall reflect the time value of money and the financial risks related to those cash flows (ALMA).

Aspect of Measurement Discount Rate

Fulfilment cash flows Current discount rates

CSM interest accretion for Rates determined on initial

contracts without direct recognition of the group
participation features
Adjustments to the CSM for Rates determined on initial
changes in the fulfilment cash recognition of the group
flows for contracts without direct
participation features
Adjustments to the CSM for changes Current discount rates
in the fulfilment cash flows for direct
participating contracts that do not vary
based on the returns on underlying
items, excluding the change in the
effect of the time value of money and
financial risks
For groups applying the PAA, liability Rates determined on initial
for remaining coverage adjustment recognition of the group
for the time value of money
Insurance finance income or expenses Discount rate used
for disaggregation
4 BUILDING BLOCK APPROACH - RISK ADJUSTMENT

 Compensation that an entity requires for bearing the uncertainty about the amount and timing of the cash
flows that arise as the entity fulfils the insurance contract
Contractual  RA shall be included in the measurement in an explicit way (i.e. uncertainty should not be included in the
service future cash flows)
margin  No prescribed technique so different companies may use different techniques
 Disclosure on the confidence-level is required if the entity uses a technique other than the confidence level
Risk technique
adjustment Knowledge
About current
estimate and
Time value trend
of money Low frequency Duration of
but high Contract
severity

Uncertainty Width of
Future cash due to lack Probability
flows Of experience distribution
Risk
Adjustment
4 RISK ADJUSTMENT - Risk Adjustment for Non-Financial Risk

Risk Adjustment corresponds to the

compensation that an entity requires for
bearing the uncertainty about the amounts of
and timing cash flows related to non- Evaluation of non financial/insurance
financial risks inherent in insurance contracts risks Integrated in the Risk
Adjustment
The scope of risks associated with the
calculation of the RA covers both insurance Evaluation of financial risks
risks (e.g. mortality risk, P&C reserve risk, Integrated
longevity, morbidity) and non-financial risks in the Best Estimate
related to insurance contracts (e.g. lapse risk,
surrender risk, and expense risk); operational
risk is not included in the RA assessment
because by nature it is considered more
global.
the IASB proposed 3 approaches to measuring Risko Asuransi: Risiko, selain risiko keuangan, yang dialihkan dari pemegang kontrak
RA: kepada penerbit kontrak. Contoh: – death or survival, injury, illness, disability, loss of
•the Cost of Capital method, property due to damage or theft, and failure of a debtor to make a payment when it is
•the Value at Risk (VaR) - (confidence level) due.
•the Tail Value at Risk approach (TVaR).
Risiko Keuangan: Risiko akibat kemungkinan perubahan masa depan atas factor”
berikut: interest rates, financial instrument prices, commodity prices, currency
exchange rates, indices of prices or rates, and credit ratings or credit indices.
4 BUILDING BLOCK APPROACH - CONTRACTUAL SERVICE MARGIN

Contractual
service  At initial recognition, the CSM is defined as the negative of fulfilment cash flow, floored by zero.
margin
 Purpose of recognizing a positive initial CSM:
Risk  To eliminate any day 1 gains (if initial CSM is positive)
adjustment  To represents the unearned profit that the entity recognizes as it provides services
under the insurance contract
Time value
of money  If CSM is floored by zero at inception, the insurance contract is onerous. All loss should be
recognized in P&L at inception

 Objective of the standard is to:

 Provide principles for the measurement of an individual insurance contract, but
Future cash that in applying the standard an entity could aggregate insurance contracts
flows provided that it meets that objective; and
 Onerous contracts should not be aggregated with profit-making contracts
4 BUILDING BLOCK APPROACH - CONTRACTUAL SERVICE MARGIN

Contractual  Subsequently, the roll-forward calculation of CSM is summarized as follows:

service
margin CSM at the beginning of the reporting period

Risk + Accreted interest

adjustment – Amount recognised for services provided in the period
+/– Changes in the estimates of future cash flows
+/– Changes in RA relating to future coverage
Time value
of money = CSM at the end of the reporting period

 Locked-in rate at the inception of contract is used for accreting interest.

 An entity should recognise the remaining contractual service margin in profit or loss over the coverage period
Future cash
in a systematic way that best reflects the remaining transfer of the services. For contracts with no
flows
participating features, the service represented by the contractual service margin is insurance coverage that:
 is provided on the basis of the passage of time; and
 reflects the expected number of contracts in force.
4 BASIC METHODS IN MEASUREMENT INSURANCE CONTRACT
Building block approach

CTPRIMA
4 BUILDING BLOCK APPROACH - INITIAL MEASUREMENT

• Measured at inception as the expected contract profit to

be earned as services are fulfilled. It is adjusted for
changes in non-financial variables affecting future
❹ coverage cash flows. It accretes interest based on day 1
discount rate (locked-in rate)
– Block 4
❸ • An entity-specific assessment of the uncertainty about
the
❷ amount and timing of future cash flows – Block 3
• An adjustment that converts future cash flows into
current amounts. Discount rates based on market
interest rates (currency, duration, liquidity). – Block 2
❶ • Expected (probability-weighted) cash flows from
premiums, claims, benefits, expenses and acquisition
costs – Block 1
• Contracts are grouped by portfolio, year of sale and one
of
the three possible profitability levels
• Profit measured and reported based on the delivery
of the “insurance coverage service”
• CSM (“deferred profit”) absorbs assumption
changes for future coverage (“unlocking”)
• Discount rates based on market interest rates
(currency, duration, liquidity)
• CSM (expected profit) from participating contracts
4 BUILDING BLOCK APPROACH - SUBSEQUENT MEASUREMENT

The fulfilment cash flows are remeasured at each reporting

date to reflect estimates based on current assumptions, Interest is accreted on the carrying amount of the CSM during the
applying the same requirements that apply to initial reporting period using the discount rate applied on initial recognition
to reflect the time value of money. The balance is allocated to profit
measurement. Changes in estimates of the fulfilment cash
or loss each reporting period to reflect the provision of insurance
flows are reflected in either profit or loss or OCI – or, in some
contract services in the period
cases, they adjust the CSM – depending on their nature.
Exercise

CTPRIMA
4 EXERCISE - BUILDING BLOCK APPROACH

Case study

 Benefits  By applying the building block approach

 2-year term  At issue: Total cash flows = 100 * 1,000 –
 Single premium of USD 1,000 10,000 – (10+10) * 3,000 – RA 2,000 =
 Sum assured = USD 3,000 28,000

 Assumption  Therefore, CSM = 28,000

 100 policies sold, with deferrable expenses
incurred of USD 10,000  Under these settings, the total IFRS 17
 Best estimate assumption: 10 claims each year insurance liability at issue is:
 Risk adjustment (RA) = USD 2,000  Fulfillment cash outflows = (10+10) *
 No other cash flows 3,000 + RA 2,000 = 62,000
 CSM = 28,000

 For simplicity, discount rate = 0%  Total IFRS 17 insurance liability = 62,000 +

28,000 = 90,000
4 EXERCISE - BUILDING BLOCK APPROACH
Case study
Start of Year 1

Accounting entries: Income statement:

Dr Cr Insurance contracts revenue -
1.0 Dr Est. future cashflow (Premium) 100,000 Incurred claims and expenses -
Cr Est Future Cash – Claim 60.000 Acquisition costs -
Cr Est Future Cash - DAC 10.000 Operating result -
Cr CSM 28,000 Investment income -
Cr RA 2,000 Profit -
(Recognition of est. future cashflow [P - Cl - Co],
RA and CSM) Balance sheet:
Assets:
2.0 Dr Cash 100,000 Cash 90,000
Cr Est. future cashflow 100,000
(Premium received) Liabilities:
Insurance contract liabilities:
3.0 Dr Est. future cashflow - DAC 10,000 Fulfillment cashflow:
Cr Cash 10,000 Est. future cashflow 60,000
(Payment of deferrable expenses) RA 2,000
CSM 28,000
90,000
Equity:
Profits -
90,000
4 EXERCISE - BUILDING BLOCK APPROACH

Case study  Profit driver assumed to be based on no. of policies

in- force:
 At the end of year 1,  The amortization factor = 28,000 / (90 + 80) = 164.7
 There are 15 claims (as opposed to the 10  Based on the remaining policies at end of year 1
claims expected) (100– 15), the CSM amortization = 85 * 164.7 = 14,000
 The Company re-estimates year 2 claims as 8  However, there is also a favorable assumption
cases, down from 10 previously change, where claims are reduced by (10-8) * 3,000
 The updated RA = 1,000 = 6,000
 No other assumption changes  Therefore ending year 1 CSM = 28,000 – 14,000 +
6,000 = 20,000

 For end of year 1,

 The updated future cash flows = 8 * 3,000 = 24,000

 Therefore total IFRS 17 insurance liability

 Fulfillment cash flows = 24,000 + RA 1,000 = 25,000
 CSM = 20,000
 Total IFRS 17 insurance liability = 45,000
4 EXERCISE - BUILDING BLOCK APPROACH
Case study
End of Year 1

Accounting entries: Income statement:

Dr Cr Insurance contracts revenue 50,000
1.0 Dr CSM 14,000 Incurred claims and expenses (45,000)
Dr RA 1,000 Acquisition costs (5,000)
Dr Est. future cashflow (expected incurred 30,000 Operating result 0
claim) Investment income -
Dr Acquisition costs 5,000 Profit 0
Cr Insurance contract revenue 50,000
(Revenue recognition) Balance sheet:
Assets:
2.0 Dr Claims incurred 45,000 Cash 45,000
Cr Cash 45,000
(Claims recognition)
Liabilities:
Insurance contract liabilities:
3.0 Dr Est. future cashflow 6,000 Fufillment cashflow:
Cr CSM 6,000 Est. future cashflow 24,000
(Recognition of impact of favorable change in future claims)
RA 1,000
CSM 20,000
45,000
Equity:
Profits 0
45,000
4 EXERCISE - BUILDING BLOCK APPROACH
Case study
End of Year 2

Accounting entries: Income statement:

Dr Cr Insurance contracts revenue 50,000
1.0 Dr CSM 20,000 Incurred claims and expenses (24,000)
Dr RA 1,000 Acquisition costs (5,000)
Dr Est. future cashflow (expected incurred 24,000 Operating result 21,000
claim) Investment income -
Dr Acquisition costs 5,000 Profit 21,000
Cr Insurance contract revenue 50,000
(Revenue recognition)
Balance sheet:
Assets:
2.0 Dr Claims incurred 24,000
Cash 21,000
Cr Cash 24,000
(Claims recognition)
Liabilities:
Insurance contract liabilities:
Fufillment cashflow:
Est. future cashflow -
RA -
CSM -
-
Equity:
Profits 21,000
21,000
Premium allocation approach

CTPRIMA
4 PREMIUM ALLOCATION APPROACH
• measures the liability for remaining coverage as the amount of premiums
received net of acquisition cash flows paid, less the net amount of
premiums and acquisition cash flows that have been recognised in profit or
loss over the expired portion of the coverage period based on the passage
of time. Subsequent Measurement
• assumes that recognising the contract‟s premium over the coverage period
provides similar information and profit patterns to those provided by
recognising insurance contract revenue measured using the general
measurement model.
4 PREMIUM ALLOCATION APPROACH - ELIGIBILITY CRITERIA

Reasonable
Coverage
approximation
period of NO of the group
NO
each contract
measurement
in the group
using the core
<= 1 year?
requirements?

YES YES
May apply premium Must apply
allocation core
approach requirements
4 PREMIUM ALLOCATION APPROACH - Simplifications for short-term contracts

A B
Liability for Liability for IFRS 17
remaining coverage incurred claims Liability
Contractual
PV of future Risk service PV of future
Risk adjustment
cash flows adjustment margin cash flows

Split in three blocks not required

A. Simplified measurement

B. Measurement under the general model, but discounting of claims to be settled

within 1 year not required
4 UNDERSTANDING LEVEL OF AGGREGATION
4 UNDERSTANDING LEVEL OF AGGREGATION
4 UNDERSTANDING LEVEL OF AGGREGATION
4 UNDERSTANDING LEVEL OF AGGREGATION
4 EXERCISE PAA - 1Y PROTECTION GROUP CONTRACT

Contoh Kasus 1 Y Group Protection Contract

Group of contracts Info Mid year reporting ending Dec x1 Jun x2 Dec x2
Issue 1 Oct x1 Reporting Periode 1 2 3
coverage 12 months
end 30 Sep x2 Premium Received 1,200 - -
Report YE Dec Direct Acq Expense (50) - -
Interim 30 of June Claims settled - - (900)
Cash In 1,150 - (900)
Cash Balance End 1,150 1,150 250
Assumptions at initial
Receive premium 1200 (*) Claims Incurred 250 500 150
pay direct Acq cost 50 (*) Risk Adjustment 15
20 30
40 (45)
(60)
Claim & risk even
Expected claim 1000
Risk on claim 6%
8% 3/12 x 1000 6% CI
lapse none
Claims settled 900 in Nov x2
(*) immediate after initial recognition
4 EXERCISE PAA - 1Y PROTECTION GROUP CONTRACT
Contoh Kasus 1 Y Group Protection Contract

Reconciliation
Financial Statement
Dec x1 Jun x2 Dec x2
Dec x1 Jun x2 Dec x2
Liability for remaining coverage
Insurance contract liability as of 1,165 1,095 -
Opening balance - 900 300
LIC 265 795 -
Cash inflows 1,200 - -
LRC 900 300 -
Insurance revenue (300) (600) (300)
BS Closing balance 900 300 -
Cash 1,150 1,150 250
Insurance contract liability (1,165) (1,095) - Liability for incurred claims
Equity (15) 55 250 Opening balance - 265 795
Estimates of the present value of
P&L future cash flows 250 500 150
Insurance revenue (par. B126) 300 600 300 Risk adjustment for
Insurance expense (par. 59a) (315) (530) (105) non-financial risk 15 30 (45)
Profit (loss) (15) 70 195 Settlement - - (900)
Closing balance 265 795 -
UPR + PDR
PDR=0 Insurance service expenses 315 530 105
Estimates of the present value
Claim Reserve + risk adjustment of future cash flows 265 530 105
Expense paid 50 - -
Gap analysis report

CTPRIMA
4 GAP ANALYSIS REPORT – ACTUARIAL ASPECT

I. Latar belakang dan Tujuan

a. Latar Belakang – Mengapa Aspek Akuaria penting
b. Tujuan – Melihat kondisi saat ini dengan persyaratan IFRS 17 (By product, Portfolio ??)
II. Pendekatan dan Metodologi – (i) Analisis product spect (ii) review asumsi dan
metodologi (iii) SAP-OJK
III. Analisis kesenjangan PSAK 74 VS PSAK 62 dan 28 – Aspek Aktuaria
a. Persyaratan Utama PSAK 74 : Definisi kontrak asuransi, Penggabungan/ pemisahan
kontrak asuransi, Pemisahan komponen non-asuransi, Pengakuan kontrak asuransi, Arus
kas akuisisi asuransi, Modifikasi kontrak dan akuntansi untuk penghentian pengakuan,
Tingkat agregasi (LoA), Kontrak yang merugi (Onerous), Batasan kontrak, Model
Pengukuran Umum (GMM), Tingkat diskonto, Penyesuaian risiko untuk risiko nonkeuangan,
Marjin Jasa Kontraktual (CSM), Pengukuran selanjutnya, Pendekatan Alokasi Premi (PAA),
Akuntansi untuk kontrak reasuransi milikan – pengukuran, Penyajian dan pengungkapan.
4 GAP ANALYSIS REPORT – ACTUARIAL ASPECT

III. Analisis kesenjangan PSAK 74 – Aspek Aktuaria (lanjutan)

b. Penjelasan rinci Analisis Kesenjangan – (Persyaratan PSAK 74)

C. Implikasi
IV. Saran dan Rekomendasi
V. Lampiran
VI. Referensi
4 GAP ANALYSIS REPORT – ACTUARIAL ASPECT

Contract Recognition
IFRS STANDARD CURRENT PRACTICES

Paragraph 25: a group of insurance contracts:  Receive premiums before the start of the insurance
i. The beginning of the coverage period of the group of coverage provided by a written contract
contracts;  Some GI contracts, such as open marine contracts, have no
ii. The date on which the first payment from a policyholder coverage commencement date
in the group becomes due; and
iii. For a group of onerous contracts, when the group becomes
onerous.
Paragraph 26: If there is no contractual due date, the first
payment from the policyholder is deemed to be due when it is
received.
IMPLICATION

IFRS 17 is a departure from current practice where only premiums from commenced contracts are accounted as revenue o
Revenue recognition will have to be changed and premiums received for pre-commenced contracts will be excluded:
 Some insurance contracts, such as open marine contracts, can lead to recognition difficulties as date of coverage
commencement may not be immediately apparent
 Contracts should not be recognized for advanced premiums and post-dated premiums in the profit and loss statement until
the beginning of the coverage period
4 GAP ANALYSIS REPORT – ACTUARIAL ASPECT
Discount Rate
IFRS STANDARD CURRENT PRACTICES

• Paragraph 36: An entity shall adjust the estimates of future cash • Currently, many general insurers estimate the insurance liabilities
flows to reflect the time value of money and the financial risks on an undiscounted basis
related to those cash flows, to the extent that the financial risks
are not included in the estimates of cash flows.
• Paragraph 56: The entity is not required to adjust the carrying
amount of the liability for remaining coverage to reflect the time
value of money and the effect of financial risk if, at initial
recognition, the entity expects that the time between providing
each part of the coverage and the related premium due date is no
more than a year.
IMPLICATION

• PAA Cohorts : If future cash flows are expected to be paid or received one year after the date the claims are incurred, discounting is
required for the liability for incurred claims
• Materiality : (i) Develop methodology and processes to demonstrate the materiality of discounting, (ii) Develop threshold for materiality.
(iii) Communication with the external auditor
• Others :Decision on the accounting policy to present the effects of changes in discount rates either in (1) profit or loss, or (2) disaggregated
between profit or loss and other comprehensive income.
Section 5 – Impact of IFRS for IT
• IT Systems Requirements
• IFRS 17 IT Gap Analysis
IT Systems Requirements

CTPRIMA
5 NEW SYSTEMS REQUIREMENTS

1. Master data management

Data preparation, data validation, posting and

2. Process Organization
reporting capability. Facilitating significant volumes
of data feeds and storage, integrate with general Ability to orchestrate end-to-end workflows with
ledgers and actuarial models to load and post data. clear reporting processes, ability to perform
Audit trail availability. adjustments and audit data inputs, outputs and any
manual interventions.
3. Calculation engine

Powerful enough to process a significant volume of

information, with the ability to trace and document 4. Rules engine
calculation inputs and outputs in detail. includes
best estimate cashflows, the risk adjustment and the Needs predefined rules that can integrate with data
CSM at inception and subsequent measurements management to generate posting. The engine must
be easy to deploy and able to accommodate your
custom posting rules
5. Reporting

Ready for both predefined and ad hoc reports.

Page 71
5 DATA MANAGEMENT

Data Availability

Sufficient Granularity?

Cleansing?

Reference Data Ready for

Enrichment?

Data Management Process in

Place?

Page 72
5 DATA PROCESS ARCHITECTURE
Core
Processes
Data Process
Marketing
Prospective
Simulation
Collection Cleansed
Underwriting Actuarial

Policy Policy Risk

Valuation
Premium Cleansing Feed back
Cash Flow Cash Flow

Reinsurance Cession Validation Enrichment Cession

Transformation
Engine
Investment Investment
CSM
Investment
Expenses Expenses
Expected Cashflow
Public Data
Commission Claim Exp Claim Exp
Actual Cashflow
Semi-Private Journal
Data Entries
Expenses
Claim
Reference Data
Internal Data Management Insurance
Acquisition Cashflow
Report
Legacy System? Reserve

DLL

Page 73
5 PROCESS INTEGRATION

What to Focus? INSURANCE BUSINESS CYCLES

Premium
Financial Marketing Underwriting
Collection

Claim Investment Reinsurance

Actuarial

Financial /
Operational Actuarial IFRS17
Accounting

Page 74
5 IFRS 17 PROGRAM

Page 75
5 CALCULATION SYSTEM QUALITY REQUIREMENTS

Calculation
System Quality
Requirements

Page 76
5 MORE THAN A COMPLIANCE EXERCISE

Key challenges faced by industry and actuaries

Implementation Challenges

Commercial Challenges

Page 77
5 INTEGRATION OF A MULTI – DISCIPLINARY TEAM

Page 78
IFRS 17 IT Gap Analysis

CTPRIMA
5 PROSES GAP ANALYSIS

Outline
Define Future Review Current
Identify Gap Resolutions &
State State
Timeline

Page 80
5 GAP ANALYSIS POINTS

1 2 3 4
Target System &
Data Infrastructure
Operating Model Procedure

Business Target Data Component

Operating Model Availability Capability Capability

Calculation Reference Data

procedures Infrastructure
Data & System
Component
Architecture
Architecture
Level of Integration Data Management
Operating
Procedure Performance
Process outline Granularity Adjustment

Data quality Project Continuity

Planning Management management

Page 81
5 TARGET OPERATING MODEL

Data requirement
Policy Grouping
Profitability
Calculation: Full
Retro? Modified? System Capability
Fair value? requirement
Separate
recognition for
reinsurance Business Process
Define
Integration
Risk Adjustment

Cash flow
information Infrastructure
source, discount
factor
CSM Calculation Organizational
Readiness

Page 82
5 DATA

Availability Governance Quality

• Policy • Policy • Granularity

• Premium • Operations • Cleansing
• Commission • Master data • Modelling
• Expenditure • Reference • Accuracy
• Claims • Archival • Throughput
• Reference data • Retrieval • Interoperability
• Other metadata • Security • Interface

Page 83
5 SYSTEM AND PROCESS

Capability

Architecture

Business User IT Management

Procedure Procedure

Project
Management
Capability

Page 84
5 INFRASTRUCTURE

Capacity Performance Continuity

Architecture
Management Management Management

Page 85
Section 6
Financial Accounting and
Reporting Aspects

CTPRIMA
6 THE CRITICAL IFRS 17 COMPONENTS

1 Definition of Insurance contracts

2 Combination / unbundling of insurance contracts

3 Separating non-insurance components

4 Recognition of insurance contracts

5 Insurance acquisition cash flows THE CRITICAL IFRS 17

COMPONENTS
6 Contract modifications and accounting for derecognition

7 Level of Aggregation (LoA)

8 Onerous contracts

9 Contract Boundaries
6 THE CRITICAL IFRS 17 COMPONENTS

10 General Measurement Model (GMM)

11 Discount Rate

12 Risk adjustments for non-financial risk

13 Contractual Service Margin

14 Subsequent Measurement

15 Premium Allocation Approach (PAA) THE CRITICAL IFRS 17

COMPONENTS
16 Accounting for reinsurance contract held – recognition

17 Accounting for reinsurance contract held - measurement

18 Presentation and disclosures

19 Transition
6 HOW DOES IFRS 17 IMPACT?

01 Business Process and Control

02 Accounting Policy Framework

03 Chart Of Account
Business Process and Control

CTPRIMA
6 BUSINESS PROCESS AND CONROL
Financial Accounting and
Business Process Financial Statement
Reporting Progress

• Marketing • SOFP (BS) EXTERNAL USER

Recording
• SOCI (IS) • Tax Office
• Underwriting • Statement Of Cash Flow • OJK
Classifying • SOCIN Equity • Stakeholder
• Reinsurance
• Notes to Financial • Other
• Actuary Summarizing Statement
• Claim Management
Presentation of Financial INTERNAL USER
• Investment Statement (Assertion)
• Other GAAP / IFRS 17 • Management
• Completeness • Employee
• Existence • Other internal user
• Right and Obligation
Information
• Valuation and allocation
for IFRS 17 • Presentation and Disclosure
Requirement

Insurance contracts , Separating Component, Combination / unbundling of insurance contracts, Recognition of insurance contracts,
Insurance acquisition cash flows , Contract modifications and accounting for derecognition, Level of Aggregation (LoA), Onerous contracts
, Contract Boundaries , Measurement Model (GMM and PAA), Discount Rate and Others requirements EXPECTED FUTURE CASH
FLOW INFORMATION.
6 BUSINESS PROCESS AND CONROL

Direct Business

• Broker Business
Business Process
• Bankassurance
• Branch
• Marketing
• Agent
Outward Business
• Underwriting
• Co Insurer
• Reinsurance
• Outward Treaty
• Actuary
Indirect Business • Outward Facultative
• Claim Management
• Axes of Lost
• Investment
• Inward Treaty
• Other
• Inward Facultative

IFRS 17 Requirement - Accuracy of Expected Future Cash Flow Information

6 1. OPERATING MECHANISM

2 Impact to IFRS 17 Requirement

Insurance company /
Reinsurer 1. Agent / Broker
Insurer
 Definition of Insurance contracts
Investee  Contract modifications
companies  Insurance acquisition cash flows

2. Reinsurer
3  Accounting for reinsurance contract held – recognition and
Insured
Party measurement
 Measurement Model (GMM and PAA)
1  Contract Boundaries
Agent / Broker
3. Insured Party
 Definition of Insurance contracts
 Contract modifications
 Combination / unbundling of insurance contracts

4 5
General
Policyholder /
insurance
Policyowner polishes

Page 93
6 1. OPERATING MECHANISM - GENERAL

2 Impact to IFRS 17 Requirement

Insurance company /
Reinsurer
Insurer 4. Policyholder / Policyowner
 Definition of Insurance contracts
Investee  Contract modifications
companies  Combination / unbundling of insurance contracts

3
Insured
5. General insurance polishes
Party
 Definition of Insurance contracts
1  Contract modifications
Agent / Broker  Combination / unbundling of insurance contracts
 Risk adjustments for non financial risk
 Contractual Service Margin
 Level of Aggregation (LoA)

4 5
General
Policyholder /
insurance
Policyowner polishes

Page 94
6 2. MARKETING ACTIVITY IDENTIFICATION FOR IFRS 17 REQUIREMENT

 Branch system
Marketing  Agency / brokerage system

Head Office

Branch Representative Off.

Page 95
6 BUSINESS PROCESS CONTROL - PRODUCT AND MARKETING

Breadth and depth

of product portfolio
Impact to IFRS 17 Requirement

Current market Product and Marketing

Market Opportunity
share
 Definition of Insurance contracts
 Contract modifications
 Combination / unbundling of insurance contracts
 Measurement Model (GMM and PAA)
Positioning  Contractual Service Margin
 Onerous Contract
Product and  Contract Boundaries
Marketing

Valuation issues Product liability

Potential disposition
Product issues
of product line

ONEROUS
(PROFITABILITY ISSUE)

Page 96
6
Activity Cost Driver Insurance Budget VS Actual LOB IT Support
Product
Marketing Expense Expected FCF Insurance Policy By LOB
Bgt Act Var
• Agent Training Training Expense – Dimension I : • Marine Cargo Application Program identification
Detail information. • Individual xxx xxx xxx • Marine Hull by marketing activity and LOB and
• Group • Fire By Policy contract
• Acquisition Cost Acquisition Expense Dimension II : 1. Policy Number
– Detail Information Period Policy 2. Insured party
• Short Term 3. Policy period
• Long Term 4. Measurement model
5. LOB
• Commission Commission expense Dimension III :
6. Nature of Expense
expense • Bank Business
7. Allocation model by LOB
• Broker Business
8. Other information
• Agent Business
9. Chart of Account
• Marketing support 10.Expense category _
• Fixed
• Promotion and • variable
Seminar • Semi variable
11. Direct Expense or Direct
• Marketing Bonus
Attributable cost
• Social Activity

• Other Marketing
Expense
Accounting Policy Framework

CTPRIMA
6 RECOGNITION

PSAK 62 PSAK 74

1. Insurance contract 1. Insurance Contract

• Kontrak asuransi diakui pada saat • Terdapat perubahan waktu pengakuan
premi diterima kontrak asuransi
2. Line of Business (LoB) 2. Level of Aggregation
• Pengelompokkan kontrak • Pengelompokkan kontrak berdasarkan
asuransi berdasarkan Class of level agregasinya (portofolio,cohort,
Business (CoB), jenis asuransi dan onerous)
dan lain lain 3. Modification Contract
3. Modification Contract • Modifikasi kontrak yang substansial
• Modifikasi dibedakan berdasarkan dapat memicu penghentian
jenis endorsement, tanpa pengakuan
mengidentifikasi tingkat
substansialnya
6 MEASUREMENT

PSAK 62 PSAK 74

1. Contract Boundary 1. Contract Boundary

• Belum terdapat persyaratan mengenai • Perlu ditentukan batasan kontrak,
batasan kontrak dimana batasan kontrak belum
2. Insurance Contract Liability tentu sama dengan periode
pertanggungan
• Cadangan premi menggunakan
perhitungan GPV dan LAT 2. Insurance Contract Liability
• Cadangan klaim dihitung berdasarkan • Model pengukuran baru yaitu model
tingkat claim, ketentuan reasuransi, pengukuran umum (GMM)
biaya inspeksi klaim dan biaya hukum, danpendekatan alokasi premi (PAA)
serta pertimbangan lain yang relevan • Marjin jasa kontraktual (CSM) diakui
• PYBMP dihitung dengan menggunakan sebagai bagian dari liabilitas atas
metode harian. Tidak ada pendekatan sisa masa pertanggungan (LRC).
serupa di bawah IFRS 4, meskipun PAA Selanjutnya diperkenalkan LIC dengan
mirip dengan pendekatan UPR saat ini mempertimbangkan time value of
money dan risk adjustment.
6 PRESENTATION

PSAK 62 PSAK 74

1. Piutang premi, piutang reasuransi, 1. Pemisahan penyajian untuk kontrak

utang reasuransi dan retrosesi, asuransi dan kontrak reasuransi yang
utang klaim, aset reasuransi, merupakan aset dan liabilitas dalam
utang reasuransi, utang kontrak laporan neraca
asuransi, utang komisi disajikan 2. Pemisahan antara pendapatan
secara terpisah underwriting dan pendapatan
2. Pendapatan asuransi merupakan keuangan dalam laporan laba rugi
pendapatan premi bruto yang 3. Tidak ada perubahan signifikan pada
dikurangi dengan premi reasuransi laporan arus kas
serta kenaikan atau penurunan
premi bukan merupakan pendapatan
dan manfaat polis masa depan
6 PRESENTATION - ILLUSTRATION

STATEMENT OF FINANCIAL POSITION STATEMENT OF FINANCIAL POSITION

DESCRIPTION
PSAK 62 PSAK 74
ASET ASET
Kas dan setara kas Kas dan setara kas
Investasi Investasi
Piutang Premi - Bersih Aset kontrak asuransi IFRS 17 Par 78 (a) dan IAS 1 Par 54 (d)
Piutang Reasuransi Aset kontrak reasuransi IFRS 17 Par 78 (a) dan IAS 1 Par 54 (d)
Aset Reasuransi Aset kontrak reasuransi IFRS 17 Par 78 (a) dan IAS 1 Par 54 (d)
Aset lain-lain (Tidak terkait denan PSAK 74) Aset lain-lain (Tidak terkait denan PSAK 74)
TOTAL ASET TOTAL ASET

LIABILITAS LIABILITIES
Utang klaim Liabilitas kontrak asuransi IFRS 17 Par 78 (b) dan IAS 1 Par 54 (m)
Utang reasuransi Liabilitas kontrak reasuransi IFRS 17 Par 78 (b) dan IAS 1 Par 54 (m)
Utang komisi Liabilitas kontrak asuransi IFRS 17 Par 78 (b) dan IAS 1 Par 54 (m)
Utang kontrak asuransi Liabilitas kontrak reasuransi IFRS 17 Par 78 (b) dan IAS 1 Par 54 (m)
Utang lain lain (Tidak terkait dengan PSAK 74) Utang lain lain (Tidak terkait dengan PSAK 74)
TOTAL LIABILITAS TOTAL LIABILITAS
6 PRESENTATION - ILLUSTRATION

STATEMENT OF INCOME STATEMENT OF INCOME

DESCRIPTION
PSAK 62 PSAK 74
PENDAPATAN UNDERWRITING PENDAPATAN
Pendatapan Premi Pendapatan jasa asuransi dan reasuransi IFRS 17 Par 80 (a), Par 83 dan IAS 1/ 82 (a
Premi Bruto Pendapatan jasa asuransi IFRS 17 Par 80 (a), Par 83 dan IAS 1/ 82 (a
Premi Reasuransi Pendapatan jasa reasuransi IFRS 17 Par 80 (a), Par 83 dan IAS 1/ 82 (a
Kenaikan atau penurunan premi bukan Pendapatan jasa asuransi
merupakan pendapatan dan manfaat polis masa IFRS 17 Par 80 (a), Par 83 dan IAS 1/ 82 (a
depan

BEBAN UNDERWRITING BEBAN

Beban klaim - bersh Beban jasa asuransi IFRS 17 Par 80 (a), Par 84/ IAS 1 par 99
Beban komisi - bersih Bean jasa asuransi IFRS 17 Par 80 (a), Par 84/ IAS 1 par 99
LABA USAHA LABA USAHA
Hasil Investasi IFRS 9
Beban usaha Beban usaha
Pendapatan lain-lain bersih Pendapatan lain lain bersih
SURPLUS (DEFISIT) SURPLUS (DEFISIT)

TOTAL PENGHASILAN KOMPREHENSIF TOTAL PENGHASILAN KOMPREHENSIF

6 DISCLOSURE
Quoted from the disclosure of PWC Presentation:
6 DISCLOSURE

NOTE :
1. Reconciliation of the net carrying amounts of contracts based on liability /asset component, i.e LRC
and LIC explain how line items in profit or loss are linked to changes in the carrying amount of
contracts.
2. More transparent disclosures for onerous contracts

3. Amounts not related to insurance service, i.e cash flows in the period, insurance finance income or
expenses, etc also included in the reconciliation

4. Separate revenue disclosure for contracts under modified retrospective or fair value approach
Chart Of Account - COA

CTPRIMA
6 CHART OF ACCOUNT - COA

CHART OF ACCOUNT

PSAK 62 PSAK 74

 Level 1 (Asset & Liability)  Granularity Level 1

 Level 2 (Current & Non Current)  Granularity Level 2
 Level 3 (Piutang Premi atau RA)  Granularity Level 3
 Dimension (By Category atau LoB)  Granularity Level 4
 Granularity Level 5
6 CHART OF ACCOUNT IFRS 17 – STATEMENT OF FINANCIAL POSITION

Group Account

Level 1 Level 2 Level 3

Asset and Liability Insurance Contract Asset (Liability) Engineering Fire MC Total

Reinsurance Contract Asset (Liability) Level 4

Engineering Fire MC Total
LRC LIC LRC LIC LRC LIC LRC LIC

Level 5
Engineering Fire MC Total
LRC LIC LRC LIC LRC LIC LRC LIC
PV CF PV CF PV CF PV CF - PV CF PV CF PV CF
RA RA RA RA - RA RA RA
CSM - CSM - - - CSM -

Page 108
6 CHART OF ACCOUNT IFRS 17 – STATEMENT OF FINANCIAL POSITION

Group Account Granularity

Level 1 • Level 1 - Merupakan kategori aset atau liabilitas

• Level 2 - Merupakan kategori aset atau liabilitas yang disusun berdasarkan

Level 2
kontrak asuransi dan kontrak reasuransi (Insurance contract asset (liability)
and reinsurance contract asset (liability)

Level 3 • Level 3 - Merupakan kategori berdasarkan portofilio level (similar risk

manage together)
Asset and
Liability • Level 4 - Merupakan kategori yang lebih rinci dari level 3 yaitu membagi
Level 4 aset dan liability menurut 2 (dua) tingkatan yaitu (i) Liability incurred
claim (LIC) (ii) Liability for remaining covered (LRC)

Level 5 • Level 5: Merupakan kategori yang lebih rinci dari level 4 yaitu asumsi
model pengukuran (measurement model) GMM dan PAA yang terdiri dari
Building Block component, PVFCF, Risk Adjustment, Contractual Service
Margin, Onerous Contract (Loss component)

Page 109
6 CHART OF ACCOUNT IFRS 17 – STATEMENT OF INCOME
Group Account

Level 1 Level 2 Level 3

Revenue and Expenses Insurance Contract revenue Engineering Fire MC

Insurance Service Expense Engineering Fire MC

Level 4
Insurance Contract Revenue
Engineering Fire MC
- - Changes and premium received - PAA
Change in CSM - LRC Change in CSM - LRC -
Change in RA - LRC Change in RA - LRC -
Expected Claim & Expenses - LRC Expected Claim & Expenses - LRC -

Insurance Service Expense

Engineering Fire MC
Incurred expenses & paid claim Incurred expenses & paid claim Incurred expenses & paid claim
Incurred accuisition Cost Incurred accuisition Cost Incurred accuisition Cost
Recognised losses from onerous contract Recognised losses from onerous contract -
Change in insurance liabilities Change in insurance liabilities -
6 CHART OF ACCOUNT IFRS 17 – STATEMENT OF INCOME

Group Account Granularity

Level 1 • Level 1 - Merupakan kategori revenue

• Level 2 - Merupakan kategori yang disusun berdasarkan pendapatan

Level 2 kontrak asuransi (insurance contract revenue)

• Level 3 - Merupakan kategori yang lebih rinci dari level 2 yaitu membagi
Level 3 pendapatan menurut Line of Business (LoB) seperti marine cargo, fire,
marine hull, engineering.
Revenue

• Level 4 - Merupakan kategori yang lebih rinci dari level 3 yaitu change in
Level 4
CSM, change in RA, Expected Claim and Expenses, Changes and premium
received - PAA

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6 CHART OF ACCOUNT IFRS 17 – STATEMENT OF INCOME

Group Account Granularity

Level 1 • Level 1 - Merupakan kategori expenses

• Level 2 - Merupakan kategori yang disusun berdasarkan beban kontrak

Level 2 asuransi (insurance service expsense)

• Level 3 - Merupakan kategori yang lebih rinci dari level 2 yaitu membagi
Level 3 beban menurut Line of Business (LoB) seperti marine cargo, fire, marine
hull, engineering.
Expenses

• Level 4 - Merupakan kategori yang lebih rinci dari level 3 yaitu incurred in
Level 4
expense and paid claim, Incurred acquisition cost, recognition losses from
onerous contract, change in insurance liability.

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IFRS 17 Financial Accounting Gap Analysis

CTPRIMA
6 GAP ANALYSIS REPORT – FINANCIAL ACCOUNTING ASPECT

I. Latar belakang dan Tujuan

a. Latar Belakang – Penjelasan Aspek akuntansi dan pelaporan di IFRS 17 secara umum
b. Tujuan – Melihat perbandingan antaran kondisi system pelaporan saat ini dengan
persyaratan IFRS 17 – terbagi menjadi :
(i) Bisnis proses dan control untuk penyajian laporan keuangan
(ii) Accounting policy and framework yang terdiri dari (i) Recognition (ii) measurement
(iii) presentation (iv) Disclosure
(iii) Chart of Account – COA

II. Pendekatan dan Metodologi – (i) Analisis bisnis proses (ii) review kebijakan akuntansi
dan pelaporan (iii) review pelaporan OJK dan Perpajakan
6 GAP ANALYSIS REPORT – FINANCIAL ACCOUNTING ASPECT

III. Analisis kesenjangan PSAK 74 VS PSAK 62 dan 28 – Aspek Akuntansi dan Pelaporan
a. Persyaratan Utama PSAK 74 dilihat dari perspektif akuntansi
i. Insurance Contract : Definisi kontrak asuransi, Penggabungan/ pemisahan kontrak
asuransi, Pemisahan komponen non-asuransi,
ii. Recognition Insurance Contract : Pengakuan kontrak asuransi, Arus kas akuisisi
asuransi, Modifikasi kontrak dan akuntansi untuk penghentian pengakuan,
iii. Measurement Insurance Contract : Tingkat agregasi (LoA), Kontrak yang merugi
(Onerous), Batasan kontrak, Model Pengukuran Umum (GMM), Tingkat diskonto,
Penyesuaian risiko untuk risiko nonkeuangan, Marjin Jasa Kontraktual (CSM),
Pengukuran selanjutnya, Pendekatan Alokasi Premi (PAA), Akuntansi untuk kontrak
reasuransi milikan – pengukuran,
iv. Presentation and Disclosure : Penyajian dan pengungkapan terutama untuk LRC dan
LIC
6 GAP ANALYSIS REPORT – FINANCIAL ACCOUNTING ASPECT

III. Analisis kesenjangan PSAK 74 – Aspek Akuntansi dan Pelaporan (lanjutan)

b. Penjelasan rinci Analisis Kesenjangan – (Persyaratan PSAK 74)

C. Implikasi
IV. Saran dan Rekomendasi
V. Lampiran
VI. Referensi
 THANK YOU
THANK YOU