Insurance finance income and expenses

Learning objectives

• Explain that insurance finance income or expenses comprise the effects of the time value of money and of financial risk on the liability.L2
• Identify the changes in the liability presented as finance income or expenses rather than in the insurance service result.L3

Normative references

• IFRS 17 §87Insurance finance income or expenses comprise the change in the carrying amount of the group arising from the effect of the time value of money, financial risk and changes in them; for contracts with direct participation features, certain changes not adjusting the margin are included in insurance service expenses.

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

1 question

• The carrying amount of a group of contracts increases by 550 euros during the period: 150 euros come from the effect of the time value of money on the liability (unwinding) and 400 euros from an excess of incurred claims over expected claims (case data). Which part of the increase is an insurance finance expense?L3