At press time, insurers were preparing to testify before an insurance working group of the International Accounting Standards Board, London, advocating for global accounting standards that reflect how the insurance industry operates.
Senior insurance executives represented by the CFO Forum, the Group of North American Insurance Enterprises, New York, and four Japanese life insurers were preparing to make their case before the IASB working group on June 29.
Collectively, they are representing 85% of the world’s life insurance market and 80% of the world’s non-life insurance market, according to Douglas Barnert, GNAIE’s executive director.
Among the points the CFOs were expected to make as the IASB culls information it will use in establishing international insurance accounting standards are:
–profit should be recognized on a release from risk basis;
–liabilities for life insurance should be measured on the present value of future cash flows with allowance for risk and uncertainty;
–policyholder behavior should be reflected in the measurement of liabilities;
–insurance policies should not be unbundled;
–liabilities should include the value of all options and guarantees; and,
–entities should measure assets and liabilities on a consistent basis.
Life, health and property-casualty insurers are becoming more focused on the development of international accounting and solvency standards because even if companies are based in the United States, they may be required to comply with these guidelines if they have international operations.
The National Association of Insurance Commissioners, Kansas City, Mo., also is becoming increasingly involved in the establishment of international insurance regulatory guidelines.