The IFRS 17 CSM roll-forward, step by step

The contractual service margin is the unearned profit in a group of insurance contracts. Each period it is rolled forward from opening to closing, and the movement is disclosed. This note sets out the steps, in the order they are usually applied, for the general measurement model (GMM) and the variable fee approach (VFA).

The steps

1. Opening CSM. By group, from last period's closing position, with the loss component for onerous groups and, for the GMM, the locked-in discount rates.
2. New contracts. Contracts recognised in the period add to the CSM of their group, or to its loss component if they are onerous at initial recognition.
3. Interest. Under the GMM, interest is accreted on the CSM at the rates locked in at initial recognition. Under the VFA there is no separate accretion; the movement in the entity's share of the underlying items carries it.
4. Changes relating to future service. Changes in the fulfilment cash flows that relate to future service adjust the CSM. Under the GMM they are measured at the locked-in rates. Under the VFA they include the change in the entity's share of the fair value of the underlying items.
5. Currency. Exchange differences on the CSM, where the group is in a foreign currency.
6. Release. Last, the CSM is released to insurance revenue for the service provided in the period, in proportion to coverage units.

The release, by coverage units

Coverage units measure the quantity of service: the benefits provided and the expected coverage period of each contract. The release for the period is the CSM before release, multiplied by the coverage units provided in the period, divided by those units plus the units expected in the future. The release comes after every other adjustment, so it reflects the CSM at the end of the period.

The loss component

When a group is onerous, there is no CSM. Instead, a loss component tracks the losses recognised in profit or loss. Later changes in the fulfilment cash flows are allocated systematically between the loss component and the rest of the liability for remaining coverage. Unfavourable changes relating to future service add to the loss; favourable ones reduce the loss component first, and only rebuild a CSM once it is gone.

A worked illustration

Illustrative amounts for one GMM group, not from any real book:

Where it shows in the disclosures

Paragraph 101 reconciles the present value of future cash flows, the risk adjustment and the CSM separately, from opening to closing. Paragraph 100 reconciles the liability for remaining coverage, the loss component and the liability for incurred claims. Paragraph 107 shows the effect of new business, and paragraph 109 when the closing CSM is expected to be recognised in profit or loss. Any unexplained difference should be visible, not buried.

How to make it reviewable

• Keep each step as a separate, named movement, by group.
• Keep the coverage units by period, actual and expected, with the run that produced them.
• Re-perform the roll-forward outside the engine, at least for a sample of groups.

How AutoImpact does it

AutoImpact's IFRS 17 engine runs these steps by group under the GMM and the VFA, with the loss component, reinsurance held and transition. Each run writes a reviewer workbook that rebuilds the roll-forward in Excel formulas. It works on AutoImpact's own projections, or on cash flows from Prophet, AXIS or an in-house model. On the synthetic demo book, the closing CSM is €5.38m.

Sources

• IFRS Foundation, IFRS 17 Insurance Contracts

This note is general information, correct as at 4 November 2026. It is not legal, accounting or actuarial advice. Check the sources for the current text.