The IASB continued its discussion on insurance contracts by holding an education session to discuss:
- the eligibility criteria for applying the premium allocation approach;
- whether discounting and accretion of interest should be required for the liability for remaining coverage; and
- the treatment of acquisition costs.
The Board asked the staff to prepare a short supplement to agenda paper 2A outlining a proposal for eligibility criteria that would:
- state a principle that the premium allocation approach could be used when the results would be similar to those produced by using the building block approach;
- permit contracts that have a coverage period of approximately twelve months or less to be eligible for the premium allocation approach; and
- Provide application guidance on when the premium allocation approach and the building block approach would produce similar results based on the criteria being developed by the staff in agenda paper 2A.
Because this was an education session, no decisions were made.
The IASB will continue its discussion on insurance contracts (including the premium allocation approach) together with the FASB in the week beginning 27 February 2012.