BC115 The IFRS does not address:

(a) acquisition costs (paragraphs BC116–BC119);

(b) salvage and subrogation (paragraphs BC120 and BC121); and

(c) policy loans (paragraph BC122).

Acquisition costs

BC116 Acquisition costs are the costs that an insurer incurs to sell, underwrite and initiate a new insurance contract. The IFRS neither prohibits nor requires the deferral of acquisition costs, nor does it prescribe what acquisition costs are deferrable, the period and method of their amortisation or whether an insurer should present deferred acquisition costs as an asset or as a reduction in insurance liabilities. The treatment of deferred acquisition costs is an integral part of existing models and cannot be amended easily without a more fundamental review of those models in phase II.