Sustainability 15 08612 v2

sustainability
Article
The Impact of IFRS 17 on the Development of Accounting
Measurement and Disclosure, in Addition to Improving the
Quality of Financial Reports, Considering Compliance
with the Requirements of IFRS 4—Jordanian Insurance
Companies-Field Study
Omar M. Alhawtmeh
Department of Accounting, Business College, University of Jordan, Aqaba 11733, Jordan; a.alhawtmeh@ju.edu.jo
Abstract: The research examines the impact of applying the IFRS 17 International Financial Re-
porting Standard on the development of accounting measurement and disclosure to improve the
quality of financial reports when considering compliance with the requirements of applying the
IFRS 4 International Financial Reporting Standard for Jordanian insurance companies. Achieving
the objective, previous studies were examined which related to the impact of applying the IFRS 17
Financial Reporting Standard on the development of accounting measurement and disclosure for
improving the quality of financial reports when considering compliance with the requirements of
applying the IFRS 4 International Financial Reporting Standard for Jordanian insurance companies.
Moreover, the researcher linked the theoretical aspect to the practical aspect. Therefore, the researcher
designed a questioner, distributed, and then analyzed the results obtained from the relevant parties.
The study found the need to conduct increased research related to the impact of adopting the IFRS
17 International Financial Reporting Standard in improving the quality of reports and overcoming
Citation: Alhawtmeh, O.M. The obstacles such as current laws, professional qualifications of those preparing reports for insurance
Impact of IFRS 17 on the companies, and the situation of auditors. Including the IFRS 4 and IFRS 17 standards in the content
Development of Accounting of accounting courses can be beneficial for linking academic study with practical practice in several
Measurement and Disclosure, in ways: Real-world application, Industry relevance, Compliance and regulation, Career opportunities,
Addition to Improving the Quality of Evolving nature of accounting. The need to adjust accounting practices of the International Financial
Financial Reports, Considering Reporting Standard IFRS 17 is an important step in the field of insurance activity to improve the
Compliance with the Requirements
quality of financial reporting. Owing to the fact that the standard has been allocated only to insurance
of IFRS 4—Jordanian Insurance
activity and not to all economic operations, means the application of the standard is limited to all
Companies-Field Study. Sustainability
insurance contracts for the duration of contracts, regardless of the nature of the activity of the entity
2023, 15, 8612. https://doi.org/
issuing those contracts. Therefore, the study recommends increasing attention on disclosure and
10.3390/su15118612
improving accounting methods in relation to IFRS 17; this is considered a major step in the insurance
Academic Editor: Marc A. Rosen business in order to improve the quality of financial reports. Additionally, relevant information is
Received: 9 March 2023 provided for financial reports and similar; this helps improve the level of transparency and quality of
Revised: 7 May 2023 the information presented in the core of the reports. Thus, it enables companies to assess the impact
Accepted: 10 May 2023 of contracts about the current financial position, financial performance, and cash flow.
Published: 25 May 2023
Keywords: IFRS 17 international financial reporting standard for insurance contracts; IFRS 4
international financial reporting standard for Jordanian insurance companies; development of
accounting measurement and disclosure; quality of financial reports for Jordanian insurance
Copyright: © 2023 by the author.
companies
Licensee MDPI, Basel, Switzerland.
This article is an open access article
distributed under the terms and
conditions of the Creative Commons
Attribution (CC BY) license (https://
1. Introduction
creativecommons.org/licenses/by/ The international business environment has witnessed rapid development resulting
4.0/). from economic globalization and the linking of global markets. The outcome is a challenge
Sustainability 2023, 15, 8612. https://doi.org/10.3390/su15118612 https://www.mdpi.com/journal/sustainability

Sustainability 2023, 15, 8612 2 of 26
that has been posed for corporate administrations to improve their level of disclosure and
transparency of financial reports in an attempt to rationalize various economic decisions
for all listed users [1].
Most notably, the global financial crisis resulted from a wave of collapses, especially
in Japan where major insurance companies failed. The most well-known was Chiyoda and
Kiwi Life Insurance Services, bankruptcy being the eventual outcome [2].
Avoiding further collapses and to attract domestic and foreign investments, financial
institutions are seeking to improve their level of disclosure with respect to their reports,
whether they are restricted to the stock market or not [3].
Conversely, providing information for those who use financial reports released by
insurance companies that are appropriate, credible, and with a high level of transparency,
contributes to rationalizing the economic decisions of users. It reflects positively on the
financial performance indicators of the relevant institutions. Accordingly, the International
Accounting Standards Board (IASB) has sought to improve the quality of financial reports of
insurance companies by adhering to the International Financial Reporting Standard (IFRS
17) [4] to overcome the shortcomings of the International Financial Reporting Standard
(IFRS 4) [5], which negatively affected the quality of their financial reports.
2. Research Problem
The insurance sector plays a vital role in the national economy, being one of the
important savings organizations that contributes significantly to the process of economic
development [6].
The sector has witnessed tremendous recent development with the emergence of new
insurance products, including life insurance associated with an investment component.
Moreover, the participation of insurance companies, alongside banking institutions, has
emerged by linking their insurance documents to banking products as they aim to improve
their financial performance indicators [7]. Therefore, it was necessary to provide appro-
priate information to all parties associated with the company, the only way to improve
the quality of financial reporting by insurance companies was to find a unified framework
which encompassed recognition, measurement, presentation, and disclosure of insurance
operations, in order that company financial reports include a high level of disclosure, trans-
parency, and are comparable at local and international levels, it is possible only through the
application of international accounting standards that have all the requirements of good
accounting. Thus, the needs of users of financial reports are met, reflecting positively on
improving the performance indicators of the companies in question [8].
Resulting from developments, the International Accounting Standards Board (IASB)
issued the IFRS 4 International Financial Reporting Standard for insurance contracts in
March 2004. The aim was to regulate the accounting practices of insurance companies [9].
The initiative was considered by professionals and those in charge of developing and
drafting standards as a temporary step prior to the issuance of a comprehensive accounting
standard for insurance contracts governing the recognition, measurement, presentation,
and disclosure of financial reports provided by the relevant companies. It was especially
important after many criticisms of the IFRS 4 International Financial Reporting Standard
had been recorded; problems had risen in practice and had involved several notable
organizations such as [10–13]; At the local level, the insurance sector is one of the important
economic sectors that have received great attention on the legislative and professional sides,
while on the legislative side, Law No. 10 of 1981 and its amendments were issued, as well
as Law No. 118 of 2008 [14].
The insurance sector with regard to financial reporting is a special case, due to the
complexity of insurance in terms of the nature of its long-term activity, as well as the
difficulties of determining the return compared to other commercial activities, which leads
to the difference in the financial statements of the insurance company from any lists of a
company in another sector [15].
While on the professional side, the Egyptian standards were amended in 2015 to
comply with international standards, including financial reporting standards (IFRS/IAS),
which included the international financial reporting standard IFRS 4. Which was translated
under the name of Egyptian Accounting Standard No. 37 “Insurance Contracts” [16].
3. Objectives
The Research article Aimed to:
• Determine the positive impact of using IFRS 17, as an alternative to IFRS 4, on the
financial statements and key performance indicators of insurance companies.
• Develop clear and consistent rules for recognizing, measuring, presenting, and dis-
closing insurance contracts. The standard enhances the comparability of financial
statements, allowing stakeholders to make more informed decisions about the perfor-
mance and financial position of insurance companies.
• Maintains compliance with other international accounting standards, avoiding di-
vergent accounting practices for identical insurance contracts. Improve the level of
disclosure and transparency in financial reports.
• The application of IFRS 17 contributes to improving the quality of financial reporting
and providing more transparent and relevant information on how the profits or losses
of insurance companies are determined in relation to the insurance services provided,
as well as the investment profits of insurance premiums collected from customers.
4. Theoretical Framework and Previous Studies

IFRS 17 introduces a new approach to measuring insurance contracts, called the “build-
ing block approach”, which requires companies to separately measure the components of
insurance contracts, such as the probability of claims, the time value of money, and the risk
adjustment. This approach is intended to provide a more accurate reflection of the value of
insurance contracts and their associated risks.
The main objective of drafting any accounting standard is to improve the quality
of financial reporting, and as a result of the problems of practical application of IFRS
4, which negatively affected the quality of financial reports of insurance companies and
the inappropriateness of the information contained therein, and accordingly, the Interna-
tional Accounting Standards Board (IASB) issued IFRS17 for the purpose of developing
requirements for measuring and disclosing financial reports for insurance companies and
improving the quality of information contained in these reports [17].
It aims to provide more transparent and comparable financial reporting for insurance
contracts, which are complex financial instruments that have long-term obligations and
often involve significant risks and uncertainties. IFRS 17 aims to improve the accuracy and
consistency of financial reporting for insurance contracts across different jurisdictions and
industries.
The insurance sector plays an important role in the economies of countries; therefore,
it has received great attention from academics and professionals. Previous accounting
approaches focused on the impact of the application of the International Financial Reporting
Standard No. IFRS 17. The focus is directed toward the development of accounting
measurement and disclosure, as well as improving the quality of financial reports in
accordance with compliance and the requirements of International Financial Reporting
Standard IFRS4 for Jordanian insurance companies.
The commitment to the application of the International Financial Reporting Standard
IFRS 4 in insurance companies contributes to improving the level of measurement and dis-
closure of their financial reports, increasing the level of transparency in financial statements
and making them comparable at the local and international levels, which supports trust
between those companies and their associated parties [8].
Compliance with the financial reporting standard IFRS 4 insurance companies is
imperative to improve the level of measurement and disclosure in the financial statements,
which entails meeting the needs of all parties associated with the company of appropriate
information to evaluate financial performance and rationalize their various investment

decisions [18].
The implementation of IFRS 4 has not contributed to improving the quality of financial
reporting to the desired level, so the IASB should develop IFRS 4 to avoid criticism related
to the application in practice [19].
Both the commitment to adopt the International Financial Reporting Standard IFRS
4 and the efficiency of financial reporting preparers to apply those standards as well as the
integrity of the data used in light of a consistent framework of legal legislation contribute
to improving the quality of financial reporting, but the development of the International
Financial Reporting Standard IFRS 4 should be consistent with other international standards
in order to ensure improved quality of financial reporting for insurance companies [20].
The application of the financial reporting standard IFRS 4 generated many criticisms,
the most important of which was the inconsistency between it and the international stan-
dard IAS 39 with regard to the evaluation of the assets and liabilities of insurance companies
as well as acquisition problems, and therefore the study recommended the need to develop
the financial reporting standard IFRS 4 to address the deficiencies that negatively affected
the quality of the financial report [21].
Clarify the appropriateness of applying revenue recognition requirements in accor-
dance with the International Financial Reporting Standard IFRS 4 in Iraqi insurance compa-
nies and measuring the impact on improving the quality of financial reports, where the
study dealt with several research points, the most important of which was how to form
profits and losses in insurance companies by loading customers’ account with risks and in-
vestment premium, and clarifying what risks borne by those companies and resulting from
the issuance of insurance contracts. The study concluded that it is necessary to oblige Iraqi
insurance companies to international financial reporting standards in order to improve the
quality of their financial reports as an initial step until the development of those standards
and the issuance of a comprehensive standard for insurance contracts only in order to
make the financial statements of insurance companies comparable and standardized at the
international level [7].
On the professional side, the Egyptian standards were amended in 2015 to comply
with international standards, including financial reporting standards (IFRS/IAS), including
the International Financial Reporting Standard IFRS 4, which was translated under the
name of Egyptian Accounting Standard No. 37 “Insurance Contracts” [22].
Significantly, the IASB (International Accounting Standards Board) started to develop
comprehensive methodology that is compatible with accounting in insurance compa-
nies [23]. The board issued the IFRS 4 Financial Reporting Standard temporarily until the
adoption of IFRS International Financial Reporting Standards on a wide international scale,
especially companies listed on international Stock Exchanges [8].
The insurance sector with regard to financial reporting is a special case, due to the
complexity of insurance in terms of the nature of its long-term activity, as well as the
difficulties of determining the return compared to other commercial activities, which leads
to the difference in the financial statements of the insurance company from any lists of a
company in another sector [10].
The IFRS 4 International Financial Reporting Standard for insurance contracts aimed
to improve matters by providing accounting methods that would enhance the quality of
financial reports of insurance companies. Thus, the needs of users of these reports would
be met by providing relevant information that helps estimate future cash flow as well as
recognizing the degree of uncertainty related to those flows [11].
The application of the financial reporting standard IFRS 4 generated many criticisms,
the most important of which was the inconsistency between it and the international stan-
dard IAS 39 with regard to the evaluation of the assets and liabilities of insurance companies
as well as acquisition problems, so the study recommended the need to develop the fi-
nancial reporting standard IFRS 4 to address the deficiencies that negatively affected the
quality of the financial report [24].
Conversely, the International Accounting Standards Board, when drafting the IFRS
17 International Financial Reporting Standard, explained that there were reasons and
justifications that called for its need. They are detailed in the issuance of the standard and
are represented in the following.
Reasons were stated in the issuance of the standard: IFRS 17:
• The international standard for financial reporting IFRS 4 is an interim standard, it
allowed the use of different accounting practices for insurance contracts; these neg-
atively reflected on the quality of financial reports and the inappropriateness of the
information contained therein for its users, investors, and financial analysts [19].
• There are complications related to the measurement process of insurance contracts:
the length of the insurance contract period, the associated risks, and the lack of trading
of those contracts in financial markets. In addition, insurance contracts may include
investment components [25].
• Many financial statements issued by insurance companies lack periodic updating as
to the value of insurance liabilities, as well as risks that reflect the impact of changes
in the economic environment, such as changes in interest rates [26].
• IFRS 4 Financial Reporting Standard allows insurance companies to use different
accounting policies with identical insurance contracts, as a result it is impossible to
make comparisons between the financial reports of insurance companies [8]. The
statement is confirmed by a study [21]. Clarifying the Impact of Applying IFRS 4
International Financial Reporting Standard on Insurance Companies in Improving
the Qualitative Characteristics of Accounting Information, contained in the financial
reports of the companies. The research relied on conducting a comparative study on a
sample of Nigerian companies before and after the application of the IFRS 4 Financial
Reporting Standard. The research concluded that Nigerian companies operating in
the insurance sector toward the application of IFRS 4 Financial Reporting Standard
had significantly contributed to improving the level of disclosure and transparency of
financial reports, making them more suitable for their users and comparable to the
local and international levels.
Research [27] clarified the Impact of the International Financial Reporting Standards
(IFRS) on enhancing the suitability of accounting information contained in the financial
reports of insurance companies listed in the Stock Exchange. The study relied on the use of
the Harris valuation model and the Ohlson model in measuring the relationship between
the book value, market value, and profits of companies shares that fell within the sample
of the research.
The research found that there was a significant impact on the value of profits, whether
before or after the application of the relevant standards; the research also found that the
characteristics of companies enhance the relevance and affect the suitability of information
contained in the financial reports.
The main objective of drafting any accounting standard is to improve the quality
of financial reporting, and as a result of the problems of practical application of IFRS 4,
which negatively affected the quality of financial reports of insurance companies and the
inappropriateness of the information contained therein, and accordingly, the International
Accounting Standards Board (IASB) [28] issued IFRS17 for the purpose of developing
requirements for measuring and disclosing financial reports for insurance companies and
improving the quality of information contained in these reports [29].
Compliance with the financial reporting standard IFRS 4 insurance companies is
imperative to improve the level of measurement and disclosure in the financial statements,
which entails meeting the needs of all parties associated with the company of appropriate
information to evaluate financial performance and rationalize their various investment
decisions [30].
Moreover, the research [23] aimed toward clarifying the impact of applying IFRS
International Financial Reporting Standards on enhancing the qualitative characteristics of
accounting information contained in financial reports, made the reports more convenient
for users from various parties associated with the company.
The research relied on conducting a comparative study between several European
countries for a number of companies listed on the stock exchange before and after apply-
ing the criteria. The study concluded that the difference in accounting practices between
countries made it necessary to apply international financial reporting standards. This was
required in order to improve the quality of reports and enhance the qualitative characteris-
tics of accounting information to make the data more relevant.
These results were confirmed by a study by [26] that evaluated the effectiveness
of the International Financial Reporting Standard IFRS 17 on enhancing the qualitative
characteristics of accounting information contained in the financial reports of insurance
companies. The findings of the study ensured that there was an accord between the
study sample and the impact of the application of the International Financial Reporting
Standard IFRS 17 on improving the content of financial reports of companies’ insurance and
strengthening of the qualitative characteristics of the accounting information contained.
Thus, it can be concluded that the International Accounting Standards Board IASB
issued the IFRS 17 International Financial Reporting Standard to achieve a number of
objectives as stated in [4,12,20,25].
4.1. The Impact of Insurance Contracts on the Financial Performance and Financial Indicators of
Insurance Companies
The result of the study by [31] “Evaluation of IFRS 17 Insurance Contracts Standard
for Insurance Companies “describes the Measurement and Disclosure Details Contained In
the International Standard for Financial Reporting IFRS 17, addressing the most important
amendments to the standard of insurance contracts IFRS 4.
A sample of insurance companies listed on the European stock market was the ba-
sis of the research. The study concluded that the application of the Financial Reporting
Standard for insurance contracts IFRS 17 as an alternative to the International Reporting
Standard IFRS 4 would contribute significantly to improving the measurement and disclo-
sure requirements in the financial reports of insurance companies. Therefore, the quality of
accounting information contained in those reports would be enhanced, making them more
convenient and comparable with the financial reporting of other insurance companies at
the international level.
Furthermore, a study [13] clarifying the role of legislation and accounting standards
related to the field of insurance, in improving the level of disclosure and transparency of
financial reports, as well as the impact on risk management, was conducted on several
banks listed on the Romanian Stock Exchange. The research found that there was a conflict
between legislation and accounting standards which led to a distortion of the information
contained in financial reports. They became misleading to users; consistency between the
prevailing legislation and laws in the country on the one hand and accounting standards
on the other is needed. It is especially important as the trend is toward applying the
International Financial Reporting Standard 17 for insurance contracts to improve the
quality of financial reports.
Both the commitment to adopt the International Financial Reporting Standard IFRS 4
and the efficiency of financial reporting preparers to apply those standards as well as the
integrity of the data used in light of a consistent framework of legal legislation contribute
to improving the quality of financial reporting, but the development of the International
Financial Reporting Standard IFRS 4 should be consistent with other international standards
in order to ensure improved quality of financial reporting for insurance companies [32].
Target for the research was [12]; clarified the most important changes in the standard
of insurance contracts IFRS 4 in addition to the role of the International Financial Reporting
Standard IFRS 17 in improving the quality of financial reports of insurance companies.
Moreover, the study addressed the measurement and disclosure requirements contained
in the IFRS 17 reporting standard, as well as how to present financial statements and the
valuation of assets at current value by using future cash flows.
The research found the variation in accounting in IFRS 4 reporting standards negatively
affected the quality of financial reports, necessitating the need to apply the International
Financial Reporting Standard for insurance contracts IFRS 17th. The research concluded
that reconciliation involving the requirements of the international standard for financial
reporting IFRS 17 as an alternative to the IFRS 4 Financial Reporting Standard is a necessity.
The reason is there is a significant impact when improving the quality of financial reports
of insurance companies; appropriate information on financial performance indicators is
enhanced, as are cash flows in order to rationalize investment decisions for users.
Conclusions are confirmed by a study [11] clarified the impact of applying the IFRS 17
International Financial Reporting Standard on improving the quality of financial reports
for insurance companies, making them more convenient for their users and comparable
with other insurance companies at local and international levels. The study addressed the
requirements for disclosure of financial reports, in addition to measurement methods and
recognition of profits, losses and other comprehensive income. The study concluded that
the drafting and issuance of the IFRS 17 Financial Reporting Standard came as a result of
many criticisms of the IFRS 4 insurance contracts standard. Therefore, it is necessary to
move toward adopting the Financial Reporting Standard IFRS 17 in order to improve the
quality of company financial reports for insurance companies.
The main objective of the IASB drafting and issuance of the IFRS 17 international finan-
cial reporting standard for insurance contracts is to develop requirements for recognition,
measurement, and accounting disclosure contained in IFRS 4; this will improve the quality
of financial reports of insurance companies and make them more convenient for their users
and comparable at the local and international levels.
4.1.1. First: Scope of Application of the International Financial Reporting Standard for
Insurance contracts IFRS 17
Due to the importance of the insurance sector, the International Accounting Standards
Board has sought to address the shortcomings of the IFRS 4 International Financial Re-
porting Standard that negatively affected financial reporting, by issuing a standard that
addresses all aspects of financial reports of companies issuing insurance contracts. The aim
is to answer the following questions as stated in the study [19,25].
• Is there a need to issue a standard that deals only with companies that issue insurance
contracts in order to ensure the consistency of financial reporting internally?
• How will the new standard establish a unified definition of the insurance company,
which can be applied consistently at international level, taking into account the differ-
ent laws and legislations from one country to another?
• Is the application of the standard limited to insurance companies only, there are
companies other than insurance companies that issue insurance contracts?
• Is the application of the standard limited to insurance contracts issued only?
• What is the position of the standard of other activities practiced by insurance compa-
nies other than insurance activities?
To overcome these complexities, the optimal solution is to allocate the standard only
to the insurance activity and not to the entity. Therefore, IFRS 17 is applied to all insurance
contracts included in its scope for the duration of the contracts, regardless of the nature of
the activity of the entity issuing those contracts.
The research indicates that the IFRS 17 International Financial Reporting Standard is
an important step in adjusting accounting practices of insurance activity and improving
the quality of financial reporting.
By extracting the third paragraph of IFRS 17, the researcher finds that there is a specific
range of contracts to which the standard applies [4].
4.1.2. Second: The Impact of the Application of the IFRS 17 International Financial
Reporting Standard on the Development of Accounting Measurement and Disclosure in
the Financial Reports of Insurance Companies
1. Insurance contracts issued by the company:
An insurance contract is defined according to IFRS 17 as “a contract whereby one party
(the issuer of the contract) accepts to assume significant insurance risks from another party
(the policyholder) by agreeing to compensate the policyholder “insurance policy” in the
event of an uncertain future event (the insured risk) adversely affecting the policyholder
(IFRS17 appendix).
The concept of the insurance contract contained in the standard is based on four
essential elements that must be met in the insurance contract in order to apply the standard:
• Insurance risks.
• The insurance risks are significant.
• The future event is uncertain.
• A negative impact will result if the insured event occurs.
Insurance risks represent the essence of the insurance contract, if the contract transfers
to the insurance company only financial risks without insurance risks, then it is not consid-
ered an insurance contract. Some insurance contracts do not transfer any insurance risks to
the company at the beginning, they may transfer the risks at a later date.
In addition, insurance risks must be significant; this happens if the insured event in
the contract results in significant additional payments incurred by the company and a total
loss for the contract. It means the present value of additional payments is greater than the
present value of the amounts payable if the insured event does not occur. Therefore, to
assess whether this situation already exists, insurance companies should rely on the present
value, using a discount rate reflecting the time value of money, cash flow characteristics,
and liquidity characteristics of the insurance contract [26].
2. Reinsurance contracts:
Insurance companies resort to transferring insurance risks to another party by using a
reinsurance company to protect them from any major losses on insurance contracts issues;
this is completed under contractual agreements included in the insurance contract [31].
A reinsurance contract is defined by IFRS 17 as “an insurance contract issued by a
reinsurance company for the purpose of compensating another insurer for losses arising
from one or more of the contracts issued [4,25]”.
IFRS 17 has considered the nature of reinsurance contracts that are different from
issued insurance contracts; this the standard requires measurement and disclosure indepen-
dent of issued contracts within its range, in order to provide detailed financial information
about the nature of the contracts and their impact on financial performance [33].
The research concludes that the requirements of IFRS 17 for assessing significant
insurance risks with a reinsurance contract are the same as the requirements for assessing
significant insurance risks with an insurance contract. Additionally, intermediary insurance
companies (between the original insurance company and the reinsurance company) will
not be affected by the standard since they do not issue insurance contracts; their activity
is limited to coordinating and arranging insurance coverage with clients (other insurance
management companies) on behalf of the insurance company.
3. Investment contracts with optional participation features
An investment contract that contains an optional participation feature is defined by
IFRS 17 as “a contract that grants the holder the right to receive additional payment benefits
as a supplement to guaranteed benefits, taking into account that the determination of the
amounts and timing of those benefits is contractually subject to the discretion of the contract
issuer, the company issuing the contract”.
The benefits depend on any of [4,19,25]:
The performance of a specific set of contracts or a specific type of contract.
• Realized and/or unrealized investment returns on a certain set of assets held by the
issuing insurance company.
• Profits or losses of the company issuing the insurance contract.
Investment contracts that contain optional participation features are one of the most
significant problems when applying IFRS 17. Despite the availability of legal insurance
contracts, they lack the essence of the definition of an insurance contract. They do not
transfer significant insurance risks [4].
Additionally, the scope of application of IFRS 17 includes investment contracts that
contain optional participation features and are not considered financial instruments to
which IFRS 9 applies, provided that the same company issues insurance contracts [4,25].
The researcher concludes that allowing the application of IFRS 17 or IFRS 15 for service
contracts with fixed fees is considered a kind of flexibility; it enables companies that issue
both types of contracts to be accounted in the same way.
4.1.3. Third: Recognition of Insurance Contracts

The IFRS 17 International Financial Reporting Standard is based on several items for
the recognition of insurance contracts, the research displays accordingly:
1. Timing of recognition of issued insurance contracts
Under IFRS 17, in the post-consolidation phase, a company should note a set of
insurance contracts that it has issued early as follows [4,25]:
• The beginning of the coverage period of the insurance contract group.
• The due date of the first payment from the policyholder in the group of insurance
contracts.
• According to the facts and circumstances, the company should be aware when the
group becomes loaded with losses prior to the start of coverage.
2. Recognition of cash flow for the acquisition of insurance contracts
• The IFRS 17 standard states that the assets or liabilities of cash flows for the acquisition
of insurance, related to the group of issued insurance contracts, should be recognized.
Immediately following the company withdraws official recognition of these assets or
liabilities arising from the cash flows for the acquisition of insurance, recognizing the
group of insurance contracts to which these cash flows were subject [4,25].
• Research shows that the IFRS 17 International Financial Reporting Standard requires
measurement and presentation; cash flows be included in the book value of groups of
insurance contracts, conversely as to what happened with acquisition costs.
3. Timing of recognition of retained reinsurance contracts
• Reinsurance contracts have a different nature from insurance contracts issued by
a company, they are designed to cover claims incurred under the basic insurance
contracts during a specific period.
• IFRS 17 states that retained reinsurance contracts are recognized as follows: [4,25]
(A) If the retained reinsurance contracts cover the loss of the group of insurance
contracts on a proportional basis, the retained reinsurance contract group is
recognized at the beginning of the coverage period of the reinsurance contracts,
or at the initial recognition of the basic insurance contracts, whichever is earlier.
(B) If the group of reinsurance contracts held covers the total losses resulting from
the group of insurance contracts exceeding a specified amount, the group of
insurance contracts held is recognized at the beginning of its coverage period.
• Research suggests that the requirements of the IFRS 17 International Financial Re-
porting Standard regarding the processing of reinsurance contracts held have been
amended considering the following:
1. The company does not recognize the group of reinsurance contracts held until at least
one of the basic insurance contracts is recognized.
2. Groups of reinsurance contracts held are considered assets, not liabilities.

3. The company that holds the reinsurance contracts pays an amount to the reinsurance
company; this is considered as an implicit part of the premium, not profits resulting
from reinsurance contracts.
4.2. Timing of the Recognition of the Investment Contract, which has an Optional
Participation Feature
IFRS 17 states that the date of initial recognition of investment contracts containing
optional participation features is the date on which the company becomes a party to the
contract [4,25].
Research concludes that the main reason is due to the lack of a pre-coverage period,
characterized by insurance contracts that require operational processes.
4.3. Recognition When Compiling Business and Financing Insurance Contracts

When a company acquires issued insurance contracts or retained insurance contracts,
it should, in accordance with paragraphs 14, 16 of IFRS 17, which concerns the grouping of
insurance contracts, identify groups of acquired contracts.
Research concludes that transferred or acquired contracts are treated in accordance
with IFRS 17, as if concluded on the date of the acquisition “aggregation or transfer”.
4.3.1. Fourth: Measurement

Examining the IFRS17 standard, research finds the standard has developed three
approaches measuring the range of insurance contracts within its scope [4,19,25,33].
1. curriculum “entrance” general model “, a compulsory measurement model.
2. the “entrance” method of variable fees.
3. the “entrance” approach to the allocation of installments
First: The First Measurement

Subject to eligibility, the approach applies to all insurance contracts except for insur-
ance contracts that have direct participation features (to which the variable fee approach
applies) and short-term insurance contracts to which the premium allocation approach
applies [31] where eligible.
This approach is based on basic components that together form the basis of measure-
ment; these components are divided into two groups as follows: [4,19,25].
First group: fulfillment of cash flows and includes the following:
1. Estimates of future cash flows.
2. Discount rates.
3. Risk adjustment for non-financial risks.
Second group: contractual service margin
Considering the components of the “entrance” curriculum for the general model,
clarification is needed:
The first group: fulfillment of cash flows.
The term cash flow fulfillment refers to estimates of the present value of the amounts
that the company expects to collect from installments and pay for claims, benefits, and
expenses related to the group contract, considering uncertainty (risk adjustment), time
value of money, and the impact of financial risks (discount rates) [4,19,25].
Paragraph 59 of IFRS 17 states that when applying the premium allocation approach,
the company recognizes cash flows for the acquisition of insurance as expenses when
incurred, provided that the coverage period for each intra-group contract is one year or
less [4,25].
One study stressed that as long as the set of insurance contracts is not loaded with
losses (an assumption on the basis of which this approach is chosen), during the initial
measurement, this approach does not specify the components used in measuring the
insurance contract. Unlike the general model, it does not require a clear measurement to
estimate future cash flows and the time value of money and risks [11].
The initial measurement using the “entrance” approach of premium allocation for the
remaining obligations is performed according to the following steps [4,19,25]
• Premiums received upon initial recognition (if any).
• Less cash flow for the acquisition of the insurance contract on the date; unless the
company chooses to recognize the payments immediately after they are incurred.
• Plus, or minus any amounts resulting from the withdrawal of official recognition at
the date of initial recognition of cash flows for the acquisition of insurance that were
previously considered assets or liabilities before that date.
Second: Subsequent Measurement

The general measurement model includes two main components:
• First of which is the fulfillment of cash flows, this depicts a direct measurement
based on estimates of the present value of future cash flows, adjusted by an explicit
measurement of a quid pro quo reflecting the non-financial risks born by the company
“risk adjustment”.
• Second is the margin of contractual service, a pivotal and complex component that
includes a significant limitation for companies in subsequent measurements of obliga-
tions of insurance contracts.
Conversely, at the end of each financial period, there should be reports containing
the changes that occurred during the period of insurance obligations. The reason is to
determine which of these changes relate to future services, which relate to current services,
and which relate to past services. Thus, it will be possible to determine the impact of these
changes on the financial position and financial performance of the company [11,12].
Paragraph 40 of IFRS 17 dealt with the concept of the book value of the liabilities of
a group of insurance contracts at the end of the period, in accordance with the general
measurement model. It was explained that they consisted of the component of residual
coverage obligations and the components of incurred claims obligations (**) [4,25]
IFRS 17 requires the allocation of the on-going amount of the contractual service
margin, adjusted with respect to the changes required by the standard (changes in estimates
of future unrealized profits, changes in insurance financing income or expenses, differences
arising from changes in foreign exchange rates), to current and future services, the services
are based on the coverage units of the group, the part allocated for the current period
is recognized in profit and loss within revenue (as a result of insurance services). The
remaining part represents unrealized profits related to future services that the company
will provide under contracts within the group [31,33].
Research concludes there is consistency between the IFRS 17 and IFRS 15 Financial
Reporting Standards with regard to the subsequent measurement of the margin of contrac-
tual service; this would improve the quality of financial reports and make the information
contained therein more convenient for users.
Paragraph 45 of IFRS 17 states that the book value of the contractual service margin
for a group of contracts containing direct participation features at the end of the reporting
period is equal to the book value at the beginning of the period adjusted for the following
specific amounts [4,25]
• The effect of adding any new contracts to the set of insurance contracts.
• Accounting for the company’s share of the change in the value of implicit items.
• Changes in the fulfillment of cash flows.
• Effect of changes in exchange rates related to the margin of contractual service.
• The portion of the contractual service margin recognized as insurance income for
services rendered during the period is determined by the distribution of the remain-
ing contractual service margin at the end of the period over the current and future
coverage period.
Third: Presentation of Financial Statements

1. Presentation in the statement of financial position
IFRS 17 requires an entity to separately present the sum of both the assets and liabilities
of issued insurance contracts and reinsurance contracts held in the balance sheet [4,25].
Research advises that the purpose of displaying the total assets and liabilities of issued
insurance contracts and reinsurance contracts, held separately in the financial position
statement, is to enhance transparency and improve the quality of information contained in
financial reports.
One study indicated that under the application of IFRS 4, there are different practices
for displaying the rights and obligations of insurance contracts in the balance sheet. Con-
versely, IFRS 17 aims to adjust these practices to improve the quality of financial reporting.
It requires the company to display the rights and obligations arising from groups of con-
tracts in net value for each in one item, as if they were the assets or liabilities of a single
insurance contract in the balance sheet. Taken into account is the separation of the compo-
nents of the insurance contract, such as implicit derivatives and investment components
which can be distinguished and be treated in accordance with other standards [34].
The researcher believes that preventing IFRS 17, not to set-off between groups of
insurance contracts representing assets and groups of insurance contracts representing
liabilities, is consistent with the requirements of IAS 1; this states that the company may
not set-off assets and liabilities, and this would improve the quality of financial reporting.
2. Performance List
IFRS 17 requires a company to classify the amounts recognized in the profit or loss
statement and other comprehensive income statements as follows [4,25]:
(A) The result of insurance services includes insurance income and expenses for insurance
services.
(B) Insurance financing income or expenses.
Fourth: Disclosure of Financial Reports

Disclosure of financial reports refers to the practice of making information about
a company’s financial performance and condition available to its stakeholders, such as
investors, creditors, and the general public. Financial reports can include a range of
financial statements, such as balance sheets, income statements, cash flow statements, and
statements of changes in equity, as well as other financial data and analysis.
The disclosure requirements of IFRS 17 aims to provide appropriate information on
financial reports and supplementary clarifications, to improve the transparency and quality
of the information presented; thus, enabling users to assess the impact of contracts falling
within the scope of the standard regarding the financial position, financial performance,
and cash flows of the company [4,19,23].
Aiming to meet the stated requirements, the company should disclose quantitative
and qualitative information that reflects its circumstances clearly as follows [4,25]:
1. The amounts recognized in the body of financial reports with reference to contracts
that fall within the scope of IFRS 17.
2. Important provisions and changes that are made resulting from the application of the
IFRS 17 Financial Reporting Standard.
3. The nature and extent of the risks arising from contracts within the scope of the IFRS
17 Financial Reporting Standard.
4.4. Important Provisions and Changes Resulting from of the Application of the Financial
Reporting Standard IFRS 17
Paragraph 117 of IFRS 17 states that significant provisions as well as changes in the
provisions used when applying the standard should be disclosed; specifically, the company
should disclose inputs, assumptions, and estimation methods it uses as follows [4,25]:
(A) Methods used to measure insurance contracts that fall within the scope of the IFRS 17
Reporting Standard.
(B) Changes in the methods and processes in estimating the inputs used in the measure-
ment of contracts.
(C) Methods used in determining both investment components, discount rates and risk
adjustment for non-financial risks.
(D) Disclosure of the level of confidence used in the calculation of risk adjustment for
non-financial risks.
(E) Disclosure, with an explanation of the methods used to determine the income or
expenses of insurance financing recognized in profit or loss, if the company chooses
to separate these expenses between profit and loss and comprehensive income.
(F) Disclosure of the yield curve used to discount cash flows.
Research shows the inclusion of the IFRS 17 International Financial Reporting Stan-
dard for disclosure; however, its main objective is to improve the level of disclosure and
transparency in financial reporting.
5. Research Hypotheses
Regarding the research presented and previous research for achieving the study
objective to reach the impact of the International Financial Reporting Standard No. IFRS 17
on the development of accounting measurement and disclosure and improving the quality
of financial reports considering compliance with the requirements of the application of the
International Financial Reporting Standard IFRS4 for Jordanian insurance companies, the
research formulates the following main hypothesis:
5.1. The Main Hypothesis

Jordanian insurance companies cannot apply IFRS 17 to the development of account-
ing measurement, disclosure, and improving the quality of financial reports concerning
compliance with the requirements of applying the IFRS 4 International Financial Reporting
Standard for Jordanian insurance companies.
The following are the sub-hypotheses results:
1. There is no statistically significant relationship between the application of IFRS 17
and the development of recognition, measurement, improvement of presentation and
disclosure of financial reports of Jordanian insurance companies.
2. There is no statistically significant relationship between the application of IFRS 17 and
the improvement of the quality of financial reports of Jordanian insurance companies.
3. There is no significant relationship between the application of IFRS 17 and compliance
with the requirements of IFRS 4 for Jordanian insurance companies.
5.2. Study Sample and Statistical Analysis

Realizing the value of scientific research and completing objectives, theory must be
linked to practice; this was carried out by verifying the validity of findings within the
theoretical framework. The hypotheses were tested by designing a survey to poll the
opinions of a specialists in the field, and analyzing the opinions received.
6. Sample Study
First: The sample was chosen arbitrarily according to each group of the study popula-
tion as follows:
(1) Faculty members of the accounting department.
• The researcher selected a sample of 62 individual faculty members in the field of
accounting, professor, an assistant professor, and a teacher.
(2) Financial reporting preparers of Jordanian insurance companies listed on the
Amman financial market.
• A total of 63 individuals responsible for preparing financial reports at Jordanian

insurance companies listed on the Amman financial market.
(3) Audit and accounting office operating in Jordan
• A total of 36 individual accountants and auditors from accounting and auditing major
firms [19,25].
(4) Financial analysts
• A total of 37 individual financial report analysts from the members of the CFA Financial
Analysts Association.
Second: Determining the response rate and the validity of the recovered lists for
statistical analysis (Tables 1 and 2).
Table 1. Response rate and validity of lists retrieved for statistical analysis.
Recovered Lists Invalid Recovered Lists Valid for

Distributed Lists Recovered Lists
Survey Sample for Stoical Analysis Statistical Analysis
No. Percent No. Percent No. Percent
Faculty members 3 5% 52 84% 62 49 94%
Accounting and
2 6% 31 86% 36 29 93%
auditing offices
Financial reports of
6 11% 54 86% 63 48 89%
insurance companies
Financial analysts 4 12% 34 92% 37 30 88%
Average/Total 15 9% 171 86% 198 156 91%
Results of statistical analysis of data and testing of study hypotheses. Statistical analysis of the survey list items.
Table 2. Honesty and accuracy for the entire poll list (Kronbach Alpha Test).
Number of Phrases Honesty Factor Coefficient of Stability (Alpha)

41 0.975 0.950
Measuring the variability (extent of agreement and disagreement) in the sample

(Tables 3 and 4).
An F-test score above 0.05 indicates that there are no differences in the opinions of the
respondents according to the main hypothesis. There is agreement that the application of
the International Financial Reporting Standard IFRS 17 in Jordanian insurance companies
will lead to the development of accounting measurement and disclosure. Moreover, it
will improve the quality of the financial reports of the companies with respect to the
clarity of the relationship between the application of standard no.17 with commitment to
the application of standard No. 4 between the opinions of the targeted in the Jordanian
insurance companies with the sub-hypotheses.
An F-test value more than 0.05 for all elements indicates that there are no differences
in the opinions of the respondents according to the main hypothesis and there is agreement
that the application of the International Financial Reporting Standard IFRS 17 for Jordanian
insurance companies will be beneficial. It will lead to the development of measurement
and accounting disclosure and an improvement in the quality of the financial reports of the
companies. A clarity will ensue between the relationship of the application of standard
no.17 with a commitment to the application of standard No. 4 between the opinions of the
targeted Jordanian insurance companies with the sub-hypotheses.
Table 3. Measuring the variability (extent of agreement and disagreement) in the sample groups
opinions depending on the job title (P—ANOVA TEST).
Statements Job Title No. Value F-Test
Jordanian insurance companies cannot apply IFRS 17 to the Faculty members 49

development of accounting measurement, disclosure and Insurance companies 29
improving the quality of financial reports concerning
Accounting and auditing offices 48 0.544
compliance with the requirements of applying the IFRS 4
International Financial Reporting Standard for Jordanian Financial analysts 30
insurance companies Summary 156
Faculty members 49
There is no significant relationship between application of Insurance Companies 29
IFRS 17 and the development of recognition, measurement
and improved presentation and disclosure of financial
reports from Jordanian insurance companies. Financial analysts 30
Summary 156
Faculty members 49
There is no statistically significant relationship between the Insurance Companies 29
implementation of IFRS 17 and the improvement in the
quality of financial reports from Jordanian insurance
companies. Financial analysts 30
Summary 156
Faculty members 49
Insurance Companies 29
There is no significant relationship between the application
of IFRS 17 and compliance with the requirements of IFRS 4 Accounting and auditing offices 48 0.455
for Jordanian insurance companies.
Financial analysts 30
Summary 156
Table 4. Measuring the variability (extent of agreement and disagreement) in the sample groups
opinions depending on the academic qualification (P—ANOVA TEST).
Statements Job Title No. T Value F-Test

Jordanian insurance companies cannot apply Doctorate 51
IFRS 17 to the development of accounting
Masters 46
measurement, disclosure, and improving the
quality of financial reports concerning Professional Diploma 15 0.596
compliance with the requirements of applying
Bachelor 44
the IFRS 4 International Financial Reporting
Standard for Jordanian insurance companies Summary 156
Doctorate 51
There is no significant relationship between the
Masters 46
application of IFRS 17 and the development of
recognition, measurement and improved Professional Diploma 15 0.694
presentation and disclosure of financial reports
Bachelor 44
for Jordanian insurance companies
Summary 156
Doctorate 51
There is no statistically significant relationship Masters 46
between the implementation of IFRS 17 and the
Professional Diploma 15 0.586
improvement in the quality of financial reports
by Jordanian insurance companies. Bachelor 44
Summary 156
Table 4. Cont.
Statements Job Title No. T Value F-Test

Doctorate 51
There is no significant relationship between the Masters 46
application of IFRS 17 and compliance with the
Professional Diploma 15 0.695
requirements of IFRS 4 for Jordanian insurance
companies. Bachelor 44
Summary 156
6.1. Statistical Analysis of Data Related to the Main Hypothesis and Its Testing
Descriptive analysis and the results of the validity and reliability of the elements
that determine IFRS 17 cannot be applied to the development of accounting measurement
and disclosure to improve the quality of financial reports regarding compliance with the
requirements of applying IFRS 4 for Jordanian insurance companies (Table 5).
Table 5. Descriptive analysis and the results of the validity and reliability of the elements of IFRS 17
requirements regarding compliance with the requirements of applying IFRS 4.
Jordanian Insurance Companies cannot apply IFRS

17 to the Development of Accounting Measurement,
Disclosure and Improving the Quality of Financial
Standard Value Percentage Percentage
Reports Concerning Compliance with the Coefficient Mean
Deviation T-Test Weight Value
Requirements of Applying the IFRS 4 International
Financial Reporting Standard for Jordanian
Insurance Companies
There is no statistically significant relationship between the application of IFRS 17 and the development of recognition,
measurement, improvement of presentation and disclosure of financial reports of Jordanian insurance companies.
1. The contract is recognized when substantial risks are
transferred to the company or when one of the parties ** 0.000 3.27 1.511 ** 0.000 74% 10
completes an obligation.
2. The group of reinsurance contracts is not recognized
until at least one of the basic insurance contracts is ** 0.000 3.56 1.235 ** 0.000 74% 12
approved.
3. Investment contracts containing optional
participation features are recognized on the date the ** 0.000 3.71 1.201 ** 0.000 73% 15
company becomes a party to the contract.
4. Acquired contracts are treated as if concluded on the
** 0.000 3.86 1.049 ** 0.000 73% 14
date of acquisition or transfer.
5. Acquisition costs are included in the book value of
** 0.000 3.51 1.189 ** 0.000 73% 7
insurance contracts.
There is no statistically significant relationship between the implementation of IFRS 17 and the improvement in the quality of
financial reports of Jordanian insurance companies.
6. Cash flow estimates are developed in an objective
way to reflect the conditions existing at the
measurement date and be consistent with market ** 0.000 3.64 1.117 ** 0.000 73% 16
prices to reduce the degree of uncertainty and improve
the relevance of information.
7. Discount rates are determined that reflect the
characteristics of cash flow arising from insurance
contracts; therefore, the lack of options for setting these ** 0.000 3.91 1.291 ** 0.000 78% 1
rates contributes to improving the quality of the
financial report.
Table 5. Cont.

Insurance Companies
8. Risk adjustment (non-financial risks) contributes to
improving the quality of the financial report by
distinguishing between generated and risk-free
** 0.000 3.69 1.096 ** 0.000 74% 13
liabilities, providing information on recognized profit
and economic burdens resulting from undertaking
the risks.
9. The use of the variable fees for contracts that contain
optional participation features reflects the different
nature of these contracts, leading to the provision of * 0.000 3.87 1.072 ** 0.000 77% 2
information characterized by relevant and honest
representation.
10. Using the installment allocation portal, if the
coverage period of each contract is one year, adopting
the most reasonable estimate, this contributes to ** 0.000 3.75 1.031 ** 0.000 75% 8
improving the quality of information contained in
financial reports.
11. Reinsurance contracts are accounted for separately
from issued insurance contracts, this leads to
providing more transparent information about the ** 0.000 3.78 1.119 ** 0.000 76% 6
rights and obligations of the company; income and
expenses are related to both contracts.
There is no significant relationship between the application of IFRS 17 and compliance with the requirements of IFRS 4 for
Jordanian insurance companies. In terms of presentation of the financial center list
12. The total assets and liabilities of the issued
insurance contracts and reinsurance contracts are
presented separately; this contributes to enhancing the ** 00.00 3.74 1.177 ** 0.000 75% 9
relevance of the information contained in the financial
reports.
13. The rights and obligations arising from contracts
are presented in net for each in one item, as if they
were the assets or liabilities of a single insurance ** 00.00 3.71 1.189 ** 0.000 74% 11
contract, this leads to an improvement in the quality of
the financial report.
Presented in terms of financial performance
14. The exclusion of investment components from
insurance revenues in accordance with IFRS 17
Financial Reporting Standard does not inflate the
** 00.00 3.80 1.202 ** 0.000 76% 4
volume of insurance revenues, this contributes to
improving the level of transparency in financial
reporting.
15. The presentation of insurance financing income or
expenses, by including in full with profits and losses or
dividing between profits, losses and comprehensive ** 00.00 3.85 1.176 ** 0.000 77% 3
income, a balance between comprehensibility and
comparability is achieved.
Table 5. Cont.

Insurance Companies
16. Disclosure of adjustments related to the change in
the net book values of insurance contracts resulting
from the movement of cash flows, income and
** 00.00 3.59 1.129 ** 0.000 72% 17
expenses recognized in the financial performance list
contributes to improving the quality of the financial
report.
17. Disclosure of details of the components regarding
obligations of insurance contracts, as well as
clarification of the amounts related to insurance ** 00.00 3.79 1.325 ** 0.000 76% 5
services, improves the quality of the financial report,
and provides appropriate information to users.
18. Disclosure of contracts acquired during the
processes of converting insurance contracts or
grouping businesses independently of the issued ** 00.00 3.54 1.132 ** 0.000 71% 18
insurance contracts contributes to providing clearer
information to those who read financial reports.
Recognized is value of the Kronbach Alpha coefficient for all elements that determine the impact of the application of IFRS 17
regarding development on the basis for recognition, measurement, improvement of presentation and disclosure of financial reports
of insurance companies 0.975.
** Indicates the significance of the correlation coefficient at the significance level of 0.01.
Testing the main hypothesis by testing the sub-hypotheses; paragraph no.7 “discount
rates are determined that reflect the characteristics of cash flows arising from insurance
contracts and therefore the lack of options for determining these rates contributes to im-
proving the quality of the financial report” relates to no.1 paragraph no.18 disclosure of
contracts “acquired during the conversion of insurance contracts or grouping of business
independently of the issued insurance contracts contributes to providing clearer informa-
tion to users of financial reports” thus, no.18 is of relative importance to paragraphs testing
the main hypothesis with testing its sub-hypotheses.
6.2. Testing the Main Hypothesis

Results of testing the main hypothesis and variables are as follows (Table 6):
• Independent variable (X): application of IFRS 17 International Financial Reporting
Standard.
• Dependent variable (Y): developing the basis for recognition, measurement, improving
the presentation and disclosure of financial reports of insurance companies.
• A-correlation analysis
The table illustrates the following:
• The positive correlation indicates that there is a direct (positive) relationship between
the application of IFRS 17 and the requirements for applying IFRS 4 for Jordanian
insurance companies.
• The total correlation coefficient (0.980) indicates the strength of direct correlation
between the application of IFRS 17, development on the basis for recognition and
measurement, and the improvement of the presentation and disclosure of financial
reports in light of compliance with the requirements of application IFRS 4 for Jordanian
Research concludes that there is a direct correlation between the application of IFRS 17
and development of the basis for recognition, measurement, improvement of presentation
and disclosure of financial reports, regarding compliance with the requirements of IFRS 4
for Jordanian insurance companies; this supports the validity of the main hypothesis of
the study.
Table 6. The Results of the Correlation Relationship between the Main Hypothesis Variables.
Variable Value Coefficient (R2 ) Correlation (R)

Jordanian insurance companies cannot
apply IFRS 17 to the development of
accounting measurement, disclosure
and improving the quality of financial
reports concerning compliance with the ** 0.000 0.961 0.980
requirements of applying the IFRS 4
International Financial Reporting
Standard for Jordanian insurance
companies
** Indicates the significance of the correlation coefficient at the significance level of 0.01.
6.2.1. B-Regression Analysis (Table 7)

(Y) A quantitative model of the simple regression between the variables of the main
hypothesis can be formulated as follows: Y = Bo + B X
Developing the basis for recognition, measurement, improvement of presentation and

disclosure of financial reports regarding compliance with the requirements of the
application for International Financial Reporting Standard IFRS 4 for Jordanian
insurance companies = 0.310 + 0.919 for the application of the International Financial
Reporting Standard IFRS 17.
Table 7. Results of regression analysis of the main hypothesis variables.
Statement Coefficient of Regression (B)

Fixed Amount (Bo) 0.310
(X) application of IFRS 17
International Financial independent variable 0.919
Reporting Standard
Research concludes from the results of the regression analysis of the main hypothesis
that there is a strong relationship between the application of IFRS 17 and development
of the basis for recognition, measurement, improvement of presentation and disclosure
of financial reports regarding compliance with the requirements of IFRS 4 for Jordanian
insurance companies; this supports the validity of the main alternative hypothesis of
the study.
Testing the first sub-hypothesis:
Research reviews the results of testing the dependent hypotheses, and the variables of
this hypothesis are as follows:
Independent variable (X): application of IFRS 17 International Financial Reporting
Standard.
Dependent variable (Y): improving the quality of financial reporting of insurance
companies.
6.2.2. A-Correlation Analysis (Table 8)

The table shows the following:
• The positive correlation indicates that there is a direct (positive) relationship be-
tween the application of IFRS 17 and the development of recognition, measurement,
improved presentation, and disclosure of financial reports of Jordanian insurance

companies.
• The total correlation value (0.951) indicates the strength of the direct correlation
between the application of IFRS 17 (as an independent variable), improving the quality
of financial reports of insurance companies, developing recognition and measurement,
improving the presentation and disclosure of financial reports of Jordanian insurance
companies (as a dependent variable).
Table 8. The results of the correlation relationship between dependent of the first sub-hypothesis
variables.
Determination Correlation
Independent Variable Value
Coefficient (R2 ) Coefficient (R)
There is no significant relationship
between the application of IFRS 17 and
the development of recognition,
** 0.000 0.903 0.951
measurement, improved presentation,
and disclosure for financial reports of
Jordanian insurance companies.
** Indicates the relevance of the correlation coefficient at the significance level of 0.01.
The research concludes there is a strong direct correlation between the application of
the IFRS 17 International Financial Reporting Standard and the development of recognition,
measurement, improvement of presentation and disclosure for financial reports of Jordanian
insurance companies; this supports the validity of the first sub-hypothesis of the study.

A quantitative model of the simple regression between the variables of the second
hypothesis can be formulated as follows Y = Bo + B X.
Improving the presentation and disclosure of financial reports of Jordanian insurance

companies = 0.128 + 0.966 applying the IFRS 17 International Financial Reporting Standard.
Table 9. Results of regression analysis of the variables of the first sub-hypothesis.
Statement Regression Coefficient (B)

Constant magnitude (Bo) 0.128
(X) application of IFRS 17 International Financial
0.966
Reporting Standard (Independent Variable)
The research concluded from the results of the regression analysis of the second
hypothesis that there is a strong impact relationship between the application of IFRS 17
and the improvement of the presentation and disclosure for financial reports of Jordanian
insurance companies; this supports the validity of the first hypothesis.
Testing the second sub-hypothesis
Researched reviewed testing the dependent hypotheses, and the variables of this
hypothesis are as follows:
Standard.
• Dependent variable (Y): improving the quality of financial reporting of insurance
companies.

• Positive correlation coefficients indicate a direct (positive) relationship between the
application of IFRS 17 and the improvement in the quality of financial reporting of
• The total correlation coefficient (0.977) indicates the strength of the direct correlation
relationship between the application of IFRS 17 (as an independent variable) and
the improvement in the quality of financial reporting of insurance companies (as a
dependent variable).
Table 10. The results of the correlation relationship between dependent hypothesis variables.
Independent Variables Value
There is no statistically
significant relationship between
the implementation of IFRS 17
** 0.000 0.954 0.977
and the improvement of the
quality of financial reports of
Jordanian insurance companies.
** Indicates the significance of the correlation coefficient at the significance level of 0.01. The previous table shows.
The research concludes that there is a strong direct correlation between the application
of the IFRS 17 International Financial Reporting Standard and the improvement in the
quality of financial reports of insurance companies; this supports the validity of the second
hypothesis of the study.

hypothesis may be formulated as follows: Y = Bo + B X.
Improving the quality of financial reports of insurance companies = 0.132 + 0.950

applying the IFRS International Financial Reporting Standard 17.
Table 11. Results of regression analysis of the second hypothesis variables.
Statement (B) Coefficient of Regression

Constant magnitude (Bo) 0.132
(X) application of the IFRS International Financial
0.950
Reporting Standard 17 (Independent Variable)
The research concludes from the results of the regression analysis of the second
hypothesis that there is a strong impact relationship between the application of IFRS 17
and improving the quality of financial reports for insurance companies; this supports the
validity of the second hypothesis of the study.
6.3. Testing the Third Sub-Hypothesis

The research reviews the results of testing the dependent hypotheses and the variables
of this hypothesis as follows:
Standard.
• Dependent variable (Y): improving the quality of financial reporting of insurance
companies.

The table shows the following results:
• A positive correlation indicates that there is a direct (positive) relationship between
the application of IFRS 17 and compliance with the requirements for the application of
IFRS 4 for Jordanian insurance companies.
• The total correlation coefficient value (0.970) indicates the strength of the positive
correlation relationship between the application of IFRS 17 (as an independent variable)
and compliance with the requirements of the application of IFRS 4 for Jordanian
insurance companies (as a dependent variable).
Table 12. The results of the correlation relationship between dependent of the third sub-hypothesis
variables.
Independent Variable Value
There is no significant
relationship between the
application of IFRS 17 and
** 0.000 0.949 0.970
compliance with the
requirements of IFRS 4 for
Jordanian insurance companies
** Indicates the relevance of the correlation coefficient at the significance level of 0.01.
Research concludes there is a strong direct correlation between the application of IFRS
17 and compliance with the requirements of IFRS 4 for Jordanian insurance companies; this
supports the validity of the third sub-hypothesis of the study.

hypothesis can be formulated as follows: Y = Bo + B X.
Compliance with the requirements of applying the IFRS 4 International Financial Reporting Standard for
Jordanian insurance companies = 0.285 + 0.910 when applying the IFRS International Financial Reporting
Standard 17.
Table 13. Results of regression analysis of the third hypothesis variables.
Statement Regression Coefficient (B)

Constant magnitude (BO) 0.285
(X) application of the IFRS International
Financial Reporting Standard 17 0.910
(Independent Variable)
The research concludes from the results of the regression analysis of the third hy-
pothesis that there is a strong impact relationship between the application of IFRS 17 and
compliance with the requirements of the application of IFRS 4 for Jordanian insurance
companies; this supports the validity of the third sub-hypothesis of the study.
7. Results and Recommendations

Study Results
1. IFRS 17 can be applied to the development of accounting measurement, disclosure and
improve the quality of financial reports regarding compliance with the requirements
of applying the IFRS 4 International Financial Reporting Standard for Jordanian
insurance companies; this supports the validity of the alternative hypothesis of the
study.
2. There is a significant statistical relationship between the application of IFRS 17 and
the development of recognition, measurement, improved presentation, and disclosure
of financial reports of Jordanian insurance companies; this supports the validity of
the first alternative sub-hypothesis of the study.
3. There is a statistically significant relationship between the application of IFRS 17 and

the improvement of the quality of financial reports of Jordanian insurance companies;
this supports the validity of the second alternative sub-hypothesis of the study.
4. There is a significant statistical relationship between the application of IFRS 17 and
compliance with the requirements of IFRS 4 for Jordanian insurance companies; this
supports the validity of the third alternative sub-hypothesis of the study.
5. The International Accounting Standards Board IASB issued the international standard
for financial reporting IFRS4 which became enforceable from January 2005; due to the
strong criticism of the standard, it was considered an interim step until the issuance
of a comprehensive accounting standard for insurance contracts.
6. The International Accounting Standards Board (IASB) drafted and issued the IFRS 17
International Financial Reporting Standard in order to improve the quality of financial
reports issued by insurance companies. In this regard, it was necessary to develop
the recognition, measurement, presentation, and disclosure bases contained in IFRS 4
International Financial Reporting Standard.
7. Insurance risks represent the essence of the insurance contract. If the contract transfers
to the insurance company only financial risks without insurance risks, then it is not an
insurance contract, taking into account that some insurance contracts do not transfer
any insurance risks to the company at the beginning, but they transfer them later, on
the basis of present value using discount rates, this did not exist as an obligation of
IFRS 4.
8. The application of IFRS 17 requires the separation of the components of the contract
into three non-insurance components according to their characteristics and conditions,
to be separately accounted for, which affects improving the quality of financial reports
and providing more relevant information to users of these reports on the cash flows
associated with these components and the company’s operational performance.
9. IFRS 17 requires that the total assets and liabilities of issued insurance contracts and
reinsurance contracts held separately be presented in the balance sheet in order to
enhance transparency and improve the quality of information contained in financial
reports.
10. The disclosure requirements of IFRS 17 aim to provide appropriate information in
financial reports and supplemental clarifications to improve the transparency and
quality of the information presented in these reports, enabling users to assess the
impact of contracts falling within the scope of the standard on the financial position,
financial performance, and cash flows of the company.
In conclusion, IFRS 17 is a comprehensive accounting standard that provides guidance
for the recognition, measurement, presentation, and disclosure of insurance contracts.
Moreover, can be applied to the development of accounting measurement, disclosure, and
improve the quality of financial reports regarding compliance with the requirements of
applying the IFRS 4 International Financial Reporting Standard for Jordanian insurance
companies The standard aims to improve the comparability and transparency of financial
reporting in the insurance industry and to provide more relevant and reliable information
to stakeholders.
By establishing a single model for accounting for insurance contracts, IFRS 17 enhances
the comparability of financial statements and provides a clearer picture of the financial
position and performance of insurance companies. The standard also requires more detailed
disclosures about the risks associated with the insurance contracts, which helps to improve
the quality of financial reporting.
8. Recommendations
Based on the benefits and challenges of implementing IFRS 17, here are some recom-
mendations for insurance companies:
1. Planning and Preparation: Insurance companies should start planning and preparing
for the implementation of IFRS 17 well in advance to ensure a smooth transition.
This includes assessing the impact of the new standard on their business processes,
systems, and data, and developing a comprehensive implementation plan.
2. Data Management: Insurance companies should ensure that they have accurate,
complete, and reliable data to support the implementation of IFRS 17. They should
also establish processes and controls to manage the data effectively.
3. IT Systems: Insurance companies should consider the need for new or upgraded
IT systems to support the implementation of IFRS 17. This may include changes to
accounting and reporting systems, data management tools, and actuarial models.
4. Training and Communication: Insurance companies should provide training and
communication to their employees, investors, and other stakeholders on the new
requirements of IFRS 17. This will help to ensure that everyone understands the
changes and their impact.
5. Ongoing Monitoring and Review: Insurance companies should establish processes to
monitor and review the effectiveness of the implementation of IFRS 17. This includes
regular assessments of the quality of financial reporting, compliance with regulatory
requirements, and the effectiveness of internal controls.
6. There is a need to conduct more research and studies related to the impact of adopting
the IFRS 17 International Financial Reporting Standard in improving the quality of
financial reports and addressing obstacles to its application. Research and studies can
help to provide insights into the potential benefits and challenges of adopting IFRS
17. Items to be addressed include current laws, professional qualification of financial
report preparers in insurance companies, as well as auditors and the increasing needs
for information required by existing and prospective investors.
7. There is a need to include the International Financial Reporting Standard IFRS 4 and
IFRS 17 in the content of the accounting course, in order to link academic study with
practice to keep abreast of developments in the international business environment,
supplying the labor market with distinguished graduates.
8. There is a need for major accounting and audit offices (KPMG, EY, PWC, Deloitte)
to issue more guidelines for the application of IFRS 17 in order to be a guide and
reference for those who prepare financial report in insurance companies and for
auditors.
9. There is a need to increase attention to disclosure, improvement, and accounting
development in relation to IFRS 17 to provide appropriate information in financial
reports and clarifications to improve the transparency and quality of the information
presented in these reports, thus, enabling users to assess the impact of contracts falling
within the scope of the standard on the financial position, financial performance, and
cash flows of the company.
Funding: This research received no external funding.

Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Data Availability Statements are available in section.
Conflicts of Interest: The author declare no conflict of interest.
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4. Theoretical Framework and Previous Studies

information to evaluate financial performance and rationalize their various investment

4.1.3. Third: Recognition of Insurance Contracts

2. Groups of reinsurance contracts held are considered assets, not liabilities.

4.3. Recognition When Compiling Business and Financing Insurance Contracts

4.3.1. Fourth: Measurement

First: The First Measurement

Second: Subsequent Measurement

Third: Presentation of Financial Statements

Fourth: Disclosure of Financial Reports

5.1. The Main Hypothesis

5.2. Study Sample and Statistical Analysis

• A total of 63 individuals responsible for preparing financial reports at Jordanian

Recovered Lists Invalid Recovered Lists Valid for

Number of Phrases Honesty Factor Coefficient of Stability (Alpha)

Measuring the variability (extent of agreement and disagreement) in the sample

Statements Job Title No. Value F-Test

Jordanian insurance companies cannot apply IFRS 17 to the Faculty members 49

Statements Job Title No. T Value F-Test

Statements Job Title No. T Value F-Test

Jordanian Insurance Companies cannot apply IFRS

Jordanian Insurance Companies cannot apply IFRS

Jordanian Insurance Companies cannot apply IFRS

6.2. Testing the Main Hypothesis

Variable Value Coefficient (R2 ) Correlation (R)

6.2.1. B-Regression Analysis (Table 7)

Developing the basis for recognition, measurement, improvement of presentation and

Statement Coefficient of Regression (B)

6.2.2. A-Correlation Analysis (Table 8)

improved presentation, and disclosure of financial reports of Jordanian insurance

6.2.3. B-Regression Analysis (Table 9)

Improving the presentation and disclosure of financial reports of Jordanian insurance

Table 9. Results of regression analysis of the variables of the first sub-hypothesis.

Statement Regression Coefficient (B)

6.2.4. A-Correlation Analysis (Table 10)

6.2.5. B-Regression Analysis (Table 11)

Improving the quality of financial reports of insurance companies = 0.132 + 0.950

Table 11. Results of regression analysis of the second hypothesis variables.

Statement (B) Coefficient of Regression

6.3. Testing the Third Sub-Hypothesis

6.3.1. A-Correlation Analysis (Table 12)

6.3.2. B-Regression Analysis (Table 13)

Table 13. Results of regression analysis of the third hypothesis variables.

Statement Regression Coefficient (B)

7. Results and Recommendations

3. There is a statistically significant relationship between the application of IFRS 17 and

Funding: This research received no external funding.

5. Available online: https://www.iasplus.com/en/standards/ifrs/ifrs4 (accessed on 8 March 2023).

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