Indian Accounting Standard (Ind AS) 18 Revenue

The requirement that insurance risk is always transferred risk, means that only risks accepted by the insurer, which were pre–existing for the policyholder at the inception of the contract, meet the definition of insurance risk. Lapse, persistency or expense risks, resulting from contracts written, do not constitute insurance risk as they are not transferred risks – even if these risks are triggered by the same events that trigger insurance risk. It therefore follows that the loss of future earnings for the insurer, when the contract is terminated by the insured event, is not insurance risk as the economic loss for the insurer is not a transferred risk. Also,...