The fourth element of the building blocks in the general model (see ‘General model of measurement of insurance contracts‘) is the contractual service margin (the CSM). This is a component of the asset or liability for the group of insurance contracts that represents the unearned profit the entity will recognise as it provides services in the future.
1. Initial recognition
An entity should measure the CSM on initial recognition of a group of insurance contracts at an amount that, unless the group of contracts is onerous (see ‘Onerous insurance contracts’), results in no income or expenses arising from [IFRS 17 38]:Read more