Specific Features of the Application of IFRS 17 – Valuation of Insurance Contracts and Profit and Loss Management

The significance of the subject arises from the worldwide shift of insurance firms to Inter-national Financial Reporting Standard 17, which became effective on January 1, 2023. The primary objective of the study was to analyze how the implementation of this standard transformed the approach to recognizing, measuring, and presenting insurance contract liabilities and financial results in the insurance industry. The research methodology was based on comparative and analytical approaches that examined the differences between the previous International Financial Reporting Standard 4 and the new International Fi-nancial Reporting Standard 17 in terms of accounting treatment. A case study analysis of selected European and Asian insurance companies, specifically Klynveld Peat Marwick Goerdeler, PricewaterhouseCoopers, Grant Thornton, and Forvis Mazars, was conducted to assess the practical implications of the new standard. The study revealed that the new standard introduced a unified measurement model for insurance contracts, which significantly enhanced transparency and comparability in financial reporting. A key finding was the impact of the contractual service margin in smoothing profit recognition over the duration of insurance contracts, resulting in more consistent profit and loss statements. The study also identified challenges that insurers faced in applying discounting techniques, updating assumptions, and implementing the general measurement model in practice. The research demonstrated the practical importance of the new standard in improving decision-making for investors and regulators by providing more detailed and realistic insights into the financial performance of insurance companies.