Coverage units and the release of the margin

Learning objectives

• Explain that the remaining margin is allocated equally to each coverage unit provided and expected to be provided, and that the amount for the period is recognised in profit or loss.L1, L2
• Calculate the release of the margin for a period from given coverage units.L3

Normative references

• IFRS 17 §B119The margin at the end of the period is allocated equally to each coverage unit provided in the period and expected to be provided in the future, and the amount allocated to the period is recognised in profit or loss; the number of coverage units reflects the quantity of benefits and the expected coverage period.

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

3 questions

• How is the contractual service margin at the end of a period spread across periods?L1
• The group of contracts of Aurore SA has a contractual service margin of {csm_before_release} before release. Management uses the number of contracts covered as the coverage unit (management's judgement: a choice not imposed by the standard). The group provided {units_period} coverage units in the period and will provide {units_future} in the future (case data). Calculate the amount released to profit or loss for the period and the closing margin.L3
• The group of contracts of Cordée SA has a contractual service margin of {csm_before_release} before release. The coverage units provided in the period represent {release_share} of the total units provided and expected (case data). Record the entry for the release of the margin for the period, recognised in insurance revenue.L3