ScopeScope

Scope

2 An entity shall apply this Standard to:

(a) insurance contracts (including reinsurance contracts) that it issues and reinsurance contracts that it holds; and

(b) financial instruments that it issues with a discretionary participation feature (see paragraph 35). AASB 7 Financial Instruments: Disclosures requires disclosure about financial instruments, including financial instruments that contain such features.

3 This Standard does not address other aspects of accounting by insurers, such as accounting for financial assets held by insurers and financial liabilities issued by insurers (see AASB 132 Financial Instruments: Presentation, AASB 7 and AASB 9 Financial Instruments), except in the transitional provisions in paragraph 45.

Aus3.1 An entity shall not apply this Standard to:

(a) general insurance contracts (see AASB 1023 General Insurance Contracts), except for fixed-fee service contracts that meet the definition of an insurance contract under this Standard; and

(b) life insurance contracts (see AASB 1038 Life Insurance Contracts).

4 An entity shall not apply this Standard to:

(a) product warranties issued directly by a manufacturer, dealer or retailer (see AASB 15 Revenue from Contracts with Customers and AASB 137 Provisions, Contingent Liabilities and Contingent Assets);

(b) employers’ assets and liabilities under employee benefit plans (see AASB 119 Employee Benefits and AASB 2 Share-based Payment) and retirement benefit obligations reported by defined benefit retirement plans (see AAS 25 Financial Reporting by Superannuation Plans);

(c) contractual rights or contractual obligations that are contingent on the future use of, or right to use, a non-financial item (for example, some licence fees, royalties, contingent lease payments and similar items), as well as a lessee’s residual value guarantee embedded in a finance lease (see AASB 15, AASB 117 Leases, and AASB 138 Intangible Assets);

(d) financial guarantee contracts unless the issuer has previously asserted explicitly that it regards such contracts as insurance contracts and has used accounting applicable to insurance contracts, in which case the issuer may elect to apply either AASB 132, AASB 7 and AASB 9 or AASB 1023 to such financial guarantee contracts. The issuer may make that election contract by contract, but the election for each contract is irrevocable;

(e) contingent consideration payable or receivable in a business combination (see AASB 3 Business Combinations); and

(f) direct insurance contracts that the entity holds (i.e. direct insurance contracts in which the entity is the policyholder). However, a cedant shall apply this Standard to reinsurance contracts that it holds.