The Group of North American Insurance Enterprises says it supports the idea of U.S. accounting regulators working with overseas regulators to develop international insurance contract standards.
The Financial Accounting Standards Board, Norwalk, Conn., recently asked for comments about whether FASB should work on an insurance policy accounting project either on its own or with the International Accounting Standards Board, London.
The GNAIE is “participating in the joint effort of the FASB and the IASB to converge standards, and this is an important part of that work,” according to Jerry de St. Paer, executive chairman of the GNAIE and a senior vice president with American International Group Inc., New York.
The GNAIE is representing the American Council of Life Insurers, Washington, on the FASB international standards project question, according to ACLI spokesman, Whit Cornman.
During a presentation to the International Association of Insurance Supervisors, Basel, Switzerland, St. Paer talked about some concerns about international standards.
One concern is that assigning a value to an insurance liability – and assuming that the value is the amount that an insurer would expect to pay to a third party to transfer rights and obligations – ignores the absence of efficient markets for most insurance liabilities, St. Paer said.
St. Paer also argued that accounting for policyholder dividends can produce the “wrong value of future cash flows.”
Another topic St. Paer addressed was the unbundling of insurance policy liabilities.