ACTUARANTS Insurance Finance Optimisation
IFRS 17 / IFRS 4 Insurance Contract Valuation Tool

Fulfilment cash flows, contractual service margin and liability roll‑forwards under the General Measurement Model, Premium Allocation Approach and Variable Fee Approach — with a side‑by‑side IFRS 4 comparison.

Model: GMM (BBA) Periods: 5 Discount rate: 5.0% Risk adjustment: 6.0%

Measurement model

Choose the approach used to measure the group of insurance contracts. This drives how the liability for remaining coverage and profit emergence are calculated.

GMM: the default (building block) model — fulfilment cash flows + risk adjustment + contractual service margin (CSM), with CSM released as insurance contract services are provided.

Cohort & valuation date

Discounting

A single flat annual rate is used to discount expected cash flows and to accrete interest on the CSM (locked‑in rate at initial recognition). For a full yield‑curve build, replace this input with a period‑by‑period rate in the cash flow table.

Risk adjustment for non‑financial risk

Modelled here as a percentage loading on the present value of expected future cash outflows — a common simplified proxy for a confidence‑level (e.g. cost‑of‑capital or VaR) approach.

Coverage units (CSM release pattern)

Determines the pace at which the CSM — and, in this tool, the risk adjustment — is recognised in profit as insurance contract services are provided.

Expected future cash flows

Enter expected premium inflows and expected claims / benefits and directly attributable expense outflows for each coverage period. Amounts are treated as arising at the end of each period.

PeriodPremium inflowClaims / benefitsAttributable expensesNet outflow
Total––––

Settlement pattern (used for IFRS 17 LIC / IFRS 4 outstanding claims reserve)

Claims incurred in a period are assumed to be paid out evenly over the following N periods. This drives the run‑off of unpaid claims held as a liability.

Acquisition costs

Directly attributable acquisition cash flows, incurred at inception and amortised over the coverage period via coverage units (GMM) or straight‑line (PAA), consistent with para 55(b) / B125 practical expedients.

CSM & risk adjustment roll‑forward

Opening balance, interest accretion at the locked‑in rate, release to profit or loss for coverage provided, and closing balance, for each period.

PeriodCSM openInterestRelease to P&LCSM closeRA openRA releaseRA close

Liability for Remaining Coverage (LRC) roll‑forward

PeriodPV of FCFRisk adj.CSMLoss componentLRC closing

Insurance service result & finance result

PeriodInsurance revenueInsurance service expenseInsurance service resultInsurance finance expenseNet result
Total

CSM roll‑forward

Profit emergence — insurance service result

IFRS 4 — simplified local‑GAAP style measurement

Illustrative comparator built the way many IFRS 4 / local regulatory regimes (e.g. India's pre‑Ind AS 117 framework) approach general insurance reserving: an undiscounted unearned premium reserve released on a straight‑line basis, and an undiscounted outstanding claims reserve with an IBNR margin. There is no risk adjustment and no CSM — profit is not deferred over the coverage period the way it is under IFRS 17.

Reserve comparison — IFRS 4 vs IFRS 17

PeriodIFRS 4: UPRIFRS 4: OCR (incl. IBNR)IFRS 4 total reserveIFRS 17: LRCIFRS 17: LICIFRS 17 total reserveDifference

Reported profit emergence — IFRS 4 underwriting result vs IFRS 17 insurance service result

Liability Adequacy Test (LAT) — IFRS 4

Compares the IFRS 4 unearned premium reserve (net of DAC) against the discounted best‑estimate value of future cash flows plus a risk margin. Under IFRS 4, if the carrying reserve is inadequate, the deficiency is recognised immediately in profit or loss; the CSM cushion available under IFRS 17 does not exist here.

PeriodUPR net of DACPV best estimate + risk marginAdequacy surplus / (deficiency)

Sensitivity analysis

Recomputes initial recognition CSM / loss component and total lifetime insurance revenue under shocked assumptions, holding all other inputs constant.

ScenarioCSM at inceptionLoss component at inceptionTotal lifetime revenueΔ CSM vs base

CSM at inception — sensitivity

Print‑ready valuation summary

Use your browser's print function (Ctrl/Cmd + P) to export this page, or print just this tab after switching to it. The summary below draws live from the current inputs.

Basis of preparation. This tool implements a simplified, single‑discount‑rate Building Blocks Approach (and a correspondingly simplified Premium Allocation Approach and Variable Fee Approach) for a single group / cohort of contracts. It does not model: a full yield curve or locked‑in vs current rate separation for OCI purposes, reinsurance contracts held, onerous‑contract grouping across cohorts, experience variances between actual and expected cash flows, discretionary cash flow reallocation under the VFA, or the transition approaches (full retrospective, modified retrospective, fair value). It is intended as an indicative working tool to support, not substitute for, a full actuarial valuation. Results have not been independently reviewed and statutory certification under applicable regulation requires sign‑off by a qualified Fellow of the Institute of Actuaries of India (or equivalent professional body).