-Impact of non-life insurance contract measurement changes on the financial statements: A Case Study of Direct Line Group

The aim of this study is to explore the implications of shifting from IFRS 4 to IFRS 17 on the financial reporting of non-life insurance companies, with a particular focus on Direct Line Group (DLG). The adoption of IFRS 17 introduced substantial changes in the accounting treatment of insurance contracts, affecting non-life insurers who predominantly use the Premium allocation approach (PAA) (IASB, 2017). The case study highlights how IFRS 17 attempts to strengthen the consistency of financial reporting across jurisdictions by introducing improved transparency, uniformity, and comparability. The work compares financial reporting under IFRS 4 and IFRS 17, using Direct Line Group's 2022 financial statements to assess how the new standard impacts the Statement of Financial Position and the Statement of Comprehensive Income. It additionally discusses how insurance contract obligations are recognized initially and measured subsequently and reveals to significant structural and quantitative changes that include the application of expected cash flows, risk adjustments, and discounting to reflect the time value of money.