The International Accounting Standards Board (IASB) met on 26 September 2012 to continue its discussions on proposals for insurance contracts accounting. Although the deliberations on the project are not complete, in the interest of providing greater certainty to the market and given the late stage of the deliberations, the Board considered the need to re-expose its proposals. The Board concluded that the proposals should be re-exposed with feedback being sought only on a limited range of questions.
In coming to the decision to re-expose, the Board considered a number of factors including the length of time that has already been devoted to the project and the importance of issuing a final Standard in a timely fashion. However, the Board decided on balance given the substantive nature of the changes made since the original Exposure Draft and the importance of understanding the operationality of its proposals re-exposure is warranted.
The targeted questions in the new Exposure Draft will relate to proposed requirements for:
- treatment of participating contracts
- presentation of premiums in the statement of comprehensive income
- treatment of the unearned profit in an insurance contract
- presenting, in other comprehensive income, the effect of changes in the discount rate used to measure the insurance contract liability; and
- the approach to transition.
Hans Hoogervorst, chairman of the IASB, said:
We are very aware of the difficulties faced by insurance companies and pension funds in the current low interest environment. As such we realise the importance of establishing a workable Standard based on current measurement as soon as possible. However, it is of equal importance that we get this Standard right.
In light of some changes made since the original Exposure Draft and the benefit that we believe can be gained from obtaining constituents’ input on these targeted areas, I believe that targeted re-exposure is the right decision. Limiting the questions in this way will enable us to avoid re-opening issues which have already been decided and sufficiently re-deliberated.
- Mark Byatt, Director of Corporate Communications and External Affairs, IFRS Foundation
Telephone: +44 (0)20 7246 6472
- Chris Welsh, Communications Manager, IFRS Foundation
Telephone: +44 (0)20 7246 6495