| 2.12 | Paragraphs 10.4 to 10.6 of FRS 102 set out how an entity's management shall use its judgement in developing and applying an accounting policy if no FRS applies specifically to a transaction, other event or condition. However, this FRS exempts an insurer from the considerations in paragraphs 10.4 to 10.6 of FRS 102 in relation to its accounting policies for: [AMD 53] |
| (a) | insurance contracts that it issues (including related acquisition costs and related intangible assets, such as those described in paragraphs 2.27 and 2.28, and paragraphs 3.16 to 3.18); and |
| (b) | reinsurance contracts that it holds. |
| 2.13 | Nevertheless, this FRS does not exempt an insurer from some implications of the considerations in paragraphs 10.4 to 10.6 of FRS 102. Specifically, an insurer: |
| (a) | unless otherwise required by the regulatory framework that applies to the entity, shall not recognise as a liability any provisions for possible future claims, if those claims arise under insurance contracts that are not in existence at the end of the reporting period (such as catastrophe provisions and equalisation provisions). The presentation of any such liabilities shall follow the requirements of the Regulations (or other legal framework that applies to the entity); |
| (b) | shall carry out the liability adequacy test described in paragraphs 2.14 to 2.18; |
| (c) | shall remove an insurance liability (or a part of an insurance liability) from its statement of financial position when, and only when, it is extinguished—ie when the obligation specified in the contract is discharged or cancelled or expires; |
| (d) | shall not offset: |
| (i) | reinsurance assets against the related insurance liabilities; or |
| (ii) | income or expense from reinsurance contracts against the expense or income from the related insurance contracts; and |
| (e) | shall consider whether its reinsurance assets are impaired (see paragraph 2.19). |
| AMD 53 Amendment Paragraph 2.12 amended by Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – Triennial review 2017 – Incremental improvements and clarifications (issued December 2017) Effective date 01/01/2019 Previous text 2.12 Paragraphs 10.4 to 10.6 of FRS 102 set out how an entity's management shall use its judgement in developing and applying an accounting policy if no FRS or FRC Abstract applies specifically to a transaction, other event or condition. However, this FRS exempts an insurer from the considerations in paragraphs 10.4 to 10.6 of FRS 102 in relation to its accounting policies for: |
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