THE INSURANCE COMMISSION (IC) is requiring covered companies to apply a new set of accounting policies that will make financial reports more transparent and universally comparable starting Jan. 1 next year.
Companies must use Philippine Financial Reporting Standard 17 (PFRS 17) by then, the regulator said in a March 1 circular posted on its website.
“Companies may opt to adopt PFRS 17 in the preparation of their annual financial statements starting Jan. 1, 2023,” it said.
PFRS 17, based on International Financial Reporting Standard 17 (IFRS 17), includes policies on how to disclose insurance contracts that provide a detailed calculation of the amount of insurance reserve liabilities and how these relate to solvency.
PFRS 17 uses a single accounting approach unlike the standard now, which is intermediary and allows insurers to apply local accounting principles.
IFRS 17 had a mandatory effectivity date of Jan. 1, 2023.
Companies that adopt the PFRS 17 early must submit IC-specific disclosures in a separate report from their financial statements for periods ending on and after Dec. 31, 2023.
Non-life insurance and professional reinsurance companies must submit premiums due and uncollected, amounts recoverable from reinsurers, funds held by ceding companies and funds held for reinsurers.
Life insurance companies must also submit these in addition to policy loans and segregated fund assets and liabilities.
Meanwhile, companies who will not yet adopt PFRS 17 must note the new reporting requirements in accounting policies, changes in accounting estimates and errors for their financial statement notes for the years ending 2023 and 2024.
The IC will also assess the impact of PFRS 17 on the financial condition and position of local insurance companies.
The regulator said it would issue another advisory for the assessment. The IC will also issue another circular for an actuarial valuation report. — By: Aaron Michael C. Sy – BusinessWorld
