NU Online News Service, June 14, 12:29 p.m. – The American Council of Life Insurers, Washington, and two large life insurance trade groups have teamed up to suggest changes to the Draft Statement of Principles on Insurance Contracts.
The International Accounting Standards Board, London, developed the draft in an effort to set international standards for insurance contracts.
ACLI, the German Insurance Association, Berlin, and the Life Insurance Association of Japan, Tokyo, sent the board a letter June 11 that emphasizes their support for the standards effort but expresses 10 areas of concern.
The groups are especially critical of a “mark-to-market” provision that would press insurers to value insurance contracts at their current market value.
“While ‘mark-to-market’ accounting might have its places, application of such an approach where there are no verifiable market prices lends to situations where entities are free to develop and use valuation models based on their own assumptions and methods,” the three groups argue.
“There is no question about whether a theoretical model could be developed and required for insurance contracts,” the groups add. “The real question is whether doing so would make matters better or worse.”