41 Insurance contracts

A device insurance scheme is within the scope of IFRS 17, which sets accounting rules for certain insurance contracts. Under this scheme, customers of Deutsche Telekom buy insurance coverage for accidental damage, loss and theft. An insurance company is insurer, and Deutsche Telekom is the insurance company’s reinsurer, covering all losses. The coverage period of each contract in the group is one month. Deutsche Telekom applies the premium allocation approach in accordance with IFRS 17. It can be reasonably expected that the premium allocation approach results in a measurement of the liability for remaining coverage for the group that does not differ materially from the one that would be produced applying the general measurement requirements in IFRS 17. Insurance revenue for the period is the amount of expected premium receipts allocated to the period. The level of insurance risk is rather constant throughout the coverage period. There has not been significant variability in the level of claims over the past years. The premium receipts are therefore allocated to each period on the basis of the passage of time in accordance with IFRS 17, and the amount of the risk adjustment is primarily based on past experience. For materiality reasons, no adjustments are made for the time value of money and the effect of financial risk. Amounts receivable from or payable to the insurance company are presented as other financial assets or financial liabilities respectively to the extent the offsetting criteria are not met. Incurred claims of uncertain timing or amount are presented as other provisions. The portfolio of insurance contracts is composed of a multitude of customers. There are no significant risk concentrations. The main risk arising from the portfolio is the level of claims.

The amounts are illustrated in the table below.

Insurance revenue in the amount of EUR 2,747 million and insurance service expenses in the amount of EUR 1,919 million were recognized in 2021.