The International Accounting Standards Board has started putting a major new insurance contract accounting draft through a formal comment period.
The International Accounting Standards Board (IASB) has started putting a major new insurance contract accounting draft through a formal comment period.
IASB, London, is proposing a single International Financial Reporting Standard (IFRS) that all insurers, in all jurisdictions, could apply to all contract types on a consistent basis, board officials say.
IASB was established in 2001, at a time when no formal international financial reporting requirements applied to insurance contracts.
IASB introduced interim standards in 2004 and said it would publish proposals for more durable standards after it reviewed existing insurance accounting rules.
The draft exposed to public commenters today is a result of that review, officials say.
IASB sought comments on a discussion paper, Preliminary Views on Insurance Contracts, in 2007. IASB received about 160 comment letters on the paper, and it has used that feedback, field test with report preparers, and other sources to develop the current draft, officials say.
IASB will gather more comments and do more field tests now that the exposure draft is available, officials say.
Comments are due
IASB officials have included a set of 19 questions to spark discussion.
“Do you think that the proposed measurement model will produce relevant information that will help users of an insurer’s financial statements to make economic decisions?” IASB officials ask commenters.
Elsewhere, IASB officials ask, “Do you agree that the risk adjustment should depict the maximum amount the insurer would rationally pay to be relieved of the risk that the ultimate fulfilment cash flows exceed those expected?”
IASB also ask about matters such as the scope of the draft, whether insurers should “unbundle” various components of an insurance contract when reporting on the performance of the contract, and transition arrangements.