Consistent with IAS 1, IFRS 17 requires disclosure of significant judgment and changes in judgment that an entity makes in applying the standard [IFRS 17 93 and IAS 1 122]. Specifically, an entity must disclose the inputs, assumptions and estimation techniques it has used, including [IFRS 17 117]:
- Methods to measure insurance contracts within the scope of IFRS 17 and processes to estimate the inputs to those methods. Unless impracticable, an entity must also provide quantitative information about those inputs.
- Any changes in methods and processes for estimating inputs used to measure contracts, the reason for each change, and the type of contracts affected.
- to the extent not covered above, the approach used:
- To distinguish changes in estimates of future cash flows arising from exercising discretion from other changes in estimates of future cash flows for contracts without direct participation features
- To determine the risk adjustment for non-financial risk, including whether changes in the risk adjustment for non-financial risk are disaggregated into an insurance service component and an insurance finance component, or are presented in full in the insurance service result.
- To determine discount rates
- To determine investment components
If an entity chooses to disaggregate insurance finance income or expenses into amounts presented in profit or loss and in other comprehensive income (see ‘Disaggregating insurance finance result‘), it must disclose an explanation of the methods used to determine the insurance finance income or expenses recognised in profit or loss [IFRS 17 118].
An entity must also disclose the confidence level used to determine the risk adjustment for non-financial risk. If the entity uses a technique other than the confidence level technique, it must disclose the technique used, and the confidence level corresponding to the results of that technique [IFRS 17 119].
An entity must disclose the yield curve (or range of yield curves) used to discount cash flows that do not vary based on the returns on underlying items. When an entity provides this disclosure in aggregate for a number of groups of insurance contracts, it must provide such disclosures in the form of weighted averages, or relatively narrow ranges [IFRS 17 120].
Unlike IFRS 4, IFRS 17 does not include an explicit disclosure requirement for an insurer’s accounting policies for insurance contracts and related liabilities, income and expense. However, IAS 1 requires an entity to disclose its significant accounting policies.