Paragraphs 32-52 establish the General Measurement Model (GMM) also known as Building Block Approach (BBA) - the default measurement model for insurance contracts in IFRS 17. Per public IFRS 17 abstract + IFRS Foundation Project Summary + Wikipedia + Big 4 Insurance Industry Insights (full IFRS 17 text NOT reproduced): the GMM measures insurance contract liability as sum of (a) Fulfilment Cash Flows (FCF) + (b) Contractual Service Margin (CSM). Fulfilment Cash Flows (Para 32-37): present value of future cash flows + risk adjustment for non-financial risk; current + explicit + unbiased + probability-weighted estimate; cash flows within the contract boundary (insurance contract premiums + claims + acquisition costs + expenses + investment components + transaction-based taxes); discount rates that reflect timing of cash flows + characteristics of the contracts including illiquidity; discount rate methods include bottom-up (risk-free + illiquidity premium) and top-down (asset portfolio yield minus credit risk premium). Risk Adjustment for Non-Financial Risk: compensation entity requires for bearing uncertainty about amount and timing of cash flows arising from non-financial risk; methods include cost of capital + value at risk + confidence level (e.g. 75th percentile per Solvency II convergence) + Tail Value at Risk; entity discloses confidence level equivalent. Contractual Service Margin (CSM) (Para 38-46): represents unearned profit entity will recognise as it provides insurance contract services over coverage period; recognised in profit or loss over coverage period via coverage units; remeasured at each reporting date for changes in fulfilment cash flows relating to future service (locked-in CSM for non-VFA + current period assumption); interest accreted at locked-in discount rate (non-VFA) or current rate (VFA); CSM cannot be negative (becomes loss component if would be negative). Subsequent Measurement (Para 40-52): liability for remaining coverage (LRC) + liability for incurred claims (LIC); release of CSM + risk adjustment to profit or loss; insurance finance income/expense via P&L or OCI election. Coordinates with IFRS 17 Para 32-52 + IASB TRG + Big 4 (KPMG + PwC + EY + Deloitte) IFRS 17 guides + Solvency II Solvency Capital Requirement (SCR). IFRS 17 General Measurement Model applies.
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.