Access the standard
All editions of FRS 103 can be found on the FRC’s website. Note the September 2024 edition of FRS 103 includes some amendments with a mandatory effective date that is later than 1 January 2024. Find details of the effective dates of amendments in the Recent amendments section below.
Summary
FRS 102 provides the definition of an insurance contract, however it does not set out the accounting required for such a contract; FRS 103 has been issued to provide the specific accounting requirements for such contracts.
FRS 103 combines existing guidance on insurance contracts found elsewhere and broadly allows entities to continue with their current practices (subject to certain additional considerations). In addition, it allows them to take advantage of ‘improvement options’ similar to those available to entities that apply IFRS 4 Insurance Contracts, provided that such options continue to comply with existing legal and regulatory requirements and are either more relevant to the users’ economic decision making and no less reliable or more reliable and no less relevant. Improvements that are permitted (but not required) include:
- Allowing remeasurement of designated insurance liabilities to reflect current market interest rates through profit or loss.
- Allowing remeasurement of liabilities for recognised but unrealised gains and losses where realised gains and losses on assets affect the valuation of insurance liabilities. The related adjustment to the liability is recognised through Other Comprehensive Income (OCI) if and only if the unrealised gains or losses are recognised through OCI.
New entrants to the insurance market which have no existing policies are advised to start with FRS 103 guidance based on FRS 27 Life Assurance/ the Association of British Insurers’ SORP before deciding whether to implement the improvements.
The standard contains disclosure requirements that:
- identify and explain amounts arising from insurance contracts issued by an entity and reinsurance contracts held by an entity;
- relate to the financial strength of entities with a long-term insurance business;
- help users understand cash flows associated with those insurance contracts.
Who should apply the standard?
FRS 103 is applied by companies that apply FRS 102 and:
- issue insurance (and reinsurance) contracts;
- hold reinsurance contracts;
- issue financial instruments with a discretionary participation feature.
Which version of the standard?
Annual period | Relevant edition of the standard | Notes on amendments and early adoption |
---|---|---|
Starts on or after 1 January 2026 | FRS 103 Insurance Contracts (September 2024) | This edition of FRS 103 incorporates all amendments issued up to September 2024 including the Periodic Review 2024 amendments, which are mostly effective from 1 January 2026. |
Starts on or after 1 January 2024 | FRS 103 Insurance Contracts (January 2022) | An entity will apply the January 2022 edition of FRS 103, plus:
|
Starts on or after 1 January 2022 | FRS 103 Insurance Contracts (January 2022) | This edition of FRS 103 incorporates all amendments issued up to January 2022. |
Recent amendments
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