(paragraphs 60-70 of IFRS 17)

BC296 A reinsurance contract is a type of insurance contract. The Board identified no reason to apply different requirements to reinsurance contracts from those applied to other insurance contracts an entity issues. Consequently, IFRS 17 requires entities that issue reinsurance contracts to use the same recognition and measurement approach as they use for other insurance contracts.

BC297 Although both an issuer of direct insurance contracts and a reinsurer of those contracts will measure their contractual rights and obligations on the same basis, in practice they will not necessarily arrive at the same amount. Differences between the estimates for the reinsurance contract and the underlying contracts may arise because the issuer of the underlying insurance contracts and the reinsurer may base estimates on access to different information; they may also make different adjustments for diversification effects.