[IFRS 17 Insurance Contracts, issued in May 2017, replaced IFRS 4 Insurance Contracts.]

BC7.30 The IASB noted that insurers may face particular problems if they apply IFRS 9 before they apply the new Standard on insurance contracts (the new IFRS 4). To avoid accounting mismatches in profit or loss, many insurers classify many of their financial assets as available-for-sale. If those insurers apply IFRS 9 before the new IFRS 4, they might decide to classify many of their financial assets at amortised cost (assuming they meet the relevant conditions in IFRS 9). When those insurers later apply the new IFRS 4, they may wish to reclassify those assets from amortised cost to fair value through profit or loss, but that may not generally be possible in accordance with IFRS 9. Thus, those insurers might have either to classify those assets at fair value through profit or loss during the intervening period or to continue to classify them at amortised cost when they apply the new IFRS 4. Either choice might lead to an accounting mismatch.

BC7.31 The IASB considered whether it could reduce such mismatches by maintaining the available-for-sale category for insurers until they can apply the new IFRS 4. However, if the IASB did so, it would have to create detailed and arbitrary descriptions of the entities and instruments to which that approach would apply. The IASB concluded that permitting the continuation of that category would not provide more useful information for users.