The Committee on Property and Casualty Insurance Financial Reporting (PCFRC) has prepared this educational note to provide guidance related to the measurement and presentation of risk adjustment for non-financial risk under International Financial Reporting Standard® (IFRS) 17 for property and casualty (P&C) insurers.
This educational note is structured in sections as follows:
• Section 1 provides an introduction.
• Section 2 provides guidance related to transitioning from IFRS 4 to IFRS 17.
• Section 3 provides guidance related to general consideration related to risk adjustment for non-financial risk (RA).
• Section 4 provides guidance on estimating RA for insurance contracts issued using quantile methods.
• Section 5 provides guidance on estimating RA for insurance contracts issued using cost of capital method.
• Section 6 provides guidance on estimating RA for insurance contracts issued using margin method.
• Section 7 provides guidance on estimating RA for reinsurance contracts held.
• Section 8 provides guidance on considerations for catastrophe reinsurance.
• Section 9 provides guidance on combining approaches and methods.
• Section 10 provides guidance on quantification of the confidence level.