40The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of:

40 The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of:
(a) the liability for remaining coverage comprising:
(i) the fulfilment cash flows related to future service allocated to the group at that date, measured applying paragraphs 33–37 and B36–B92;
(ii) the contractual service margin of the group at that date, measured applying paragraphs 43–46; and
(b) the liability for incurred claims, comprising the fulfilment cash flows related to past service allocated to the group at that date, measured applying paragraphs 33–37 and B36–B92.
41 An entity shall recognise income and expenses for the following changes in the carrying amount of the liability for remaining coverage:
(a) insurance revenue – for the reduction in the liability for remaining coverage because of services provided in the period, measured applying paragraphs B120–B124;
(b) insurance service expenses – for losses on groups of onerous contracts, and reversals of such losses (see paragraphs 47–52); and
(c) insurance finance income or expenses – for the effect of the time value of money and the effect of financial risk as specified in paragraph 87.
42 An entity shall recognise income and expenses for the following changes in the carrying amount of the liability for incurred claims:
(a) insurance service expenses – for the increase in the liability because of claims and expenses incurred in the period, excluding any investment components;
(b) insurance service expenses – for any subsequent changes in fulfilment cash flows relating to incurred claims and incurred expenses; and
(c) insurance finance income or expenses – for the effect of the time value of money and the effect of financial risk as specified in paragraph 87.

Contractual service margin (paragraphs B96–B119B)

43 The contractual service margin at the end of the reporting period represents the profit in the group of insurance contracts that has not yet been recognised in profit or loss because it relates to the future service to be provided under the contracts in the group.
44 For insurance contracts without direct participation features, the carrying amount of the contractual service margin of a group of contracts at the end of the reporting period equals the carrying amount at the start of the reporting period adjusted for:
(b) interest accreted on the carrying amount of the contractual service margin during the reporting period, measured at the discount rates specified in paragraph B72(b);
(c) the changes in fulfilment cash flows relating to future service as specified in paragraphs B96–B100, except to the extent that:
(i) such increases in the fulfilment cash flows exceed the carrying amount of the contractual service margin, giving rise to a loss (see paragraph 48(a)); or
(ii) such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage applying paragraph 50(b).
(d) the effect of any currency exchange differences on the contractual service margin; and
(e) the amount recognised as insurance revenue because of the transfer of insurance contract services in the period, determined by the allocation of the contractual service margin remaining at the end of the reporting period (before any allocation) over the current and remaining coverage period applying paragraph B119.
45 For insurance contracts with direct participation features (see paragraphs B101–B118), the carrying amount of the contractual service margin of a group of contracts at the end of the reporting period equals the carrying amount at the start of the reporting period adjusted for the amounts specified in subparagraphs (a)–(e) below. An entity is not required to identify these adjustments separately. Instead, a combined amount may be determined for some, or all, of the adjustments. The adjustments are:
(b) the change in the amount of the entity’s share of the fair value of the underlying items (see paragraph B104(b)(i)), except to the extent that:
(i) paragraph B115 (on risk mitigation) applies;
(ii) the decrease in the amount of the entity’s share of the fair value of the underlying items exceeds the carrying amount of the contractual service margin, giving rise to a loss (see paragraph 48); or
(iii) the increase in the amount of the entity’s share of the fair value of the underlying items reverses the amount in (ii).
(c) the changes in fulfilment cash flows relating to future service, as specified in paragraphs B101–B118, except to the extent that:
(i) paragraph B115 (on risk mitigation) applies;
(ii) such increases in the fulfilment cash flows exceed the carrying amount of the contractual service margin, giving rise to a loss (see paragraph 48); or
(iii) such decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage applying paragraph 50(b).
(d) the effect of any currency exchange differences arising on the contractual service margin; and
(e) the amount recognised as insurance revenue because of the transfer of insurance contract services in the period, determined by the allocation of the contractual service margin remaining at the end of the reporting period (before any allocation) over the current and remaining coverage period applying paragraph B119.
46 Some changes in the contractual service margin offset changes in the fulfilment cash flows for the liability for remaining coverage, resulting in no change in the total carrying amount of the liability for remaining coverage. To the extent that changes in the contractual service margin do not offset changes in the fulfilment cash flows for the liability for remaining coverage, an entity shall recognise income and expenses for the changes, applying paragraph 41.