BC248 The Board observed that although the overlay approach addressed concerns about the additional accounting mismatches and volatility in profit or loss that may arise when IFRS 9 is applied in conjunction with IFRS 4, it would result in additional costs compared to applying IFRS 9 without the overlay approach (see paragraph BC294) or allowing insurers to continue to apply IAS 39.

BC249 Accordingly, the Board introduced a temporary exemption from IFRS 9 for a limited period for insurers whose activities are predominantly connected with insurance. An insurer applying the temporary exemption continues to apply IAS 39 rather than applying IFRS 9. The Board concluded that, for such insurers in that limited period, the temporary exemption reduces costs in a way that would outweigh the following disadvantages:

(a) users of financial statements would not have the significantly improved information about financial instruments provided by applying IFRS 9; and

(b) cross-sector comparability would be reduced.