Unbundling the deposit component of an insurance contract leads to the separate recognition and measurement of the financial asset or financial liability arising under the deposit component, and the insurance component of the contract. If the deposit unbundling rules did not apply and the accounting policies of the insurer or reinsurer did not require all assets and liabilities under the contract to be recognised, liabilities might be incorrectly recognised as income and assets as expenses. If the deposit component is unbundled, the insurance component of the unbundled contract is accounted for, in terms of IFRS 4, using the entity’s accounting policies for insurance contracts. The treatment of assets and.
