The Challenges of Applying IFRS 17 to the Insurance Market of Bosnia and Herzegovina
DOI:
https://doi.org/10.46541/978-86-7233-380-0_13Keywords:
valuation models, current estimates of future cash flows, discounting, risk premium, contracted margin of services, implementation challengesAbstract
The subject of this paper are the necessary assumptions that insurance companies should satisfy in order to
align their operations with the requirements of the International Financial Reporting Standard 17-Insurance Contracts
(IFRS 17) and be ready to apply it from the moment of entry into force on 1.1.2021. years. The paper will analyze
which changes are being introduced by this standard in comparison to the existing International Financial Reporting
Standard 4, as well as the accounting practice of companies operating in the insurance market of Bosnia and
Herzegovina. Particular attention will be paid to models for valuation of insurance obligations that this standard
defines. The aim of the study is to show the expected effects of this standard on the business dealings of insurance
companies, on the basis of published research dealing with the application of IFRS 17 and its compatibility with the
Solvency II regulatory framework, which is applied in the countries of the European Union starting January 1, 2016,
taking into account the specifics of the insurance market in Bosnia and Herzegovina. Bearing in mind that for the
quantification of costs and benefits from the introduction of the new standard there are no reliable techniques and that
the actual effects will be known only after the implementation of the new requirements defined by the standards, the
analysis of the expected effects shown in the work is qualitative.
