Acquisition costs in the simplified approach

Learning objectives

• Explain that insurance acquisition cash flows may be recognised as an expense when incurred if the coverage period of each contract in the group is no more than one year.L2
• Calculate the difference in the liability between the option to expense and the deduction from the liability.L3

Normative references

• IFRS 17 §59The entity may recognise insurance acquisition cash flows as expenses when incurred, if the coverage period of each contract in the group is one year or less; it may also choose not to discount the liability for incurred claims under certain conditions.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• Tellis SA applies the premium allocation approach to a group whose contracts each have a coverage period of nine months. It has incurred 100 euros of acquisition cash flows. What may it do with these flows?L2