The International Accounting Standards Board (IASB) today published for public comment an exposure draft of improvements to the accounting for insurance contracts. The exposure draft proposes a single International Financial Reporting Standard (IFRS) that all insurers, in all jurisdictions, could apply to all contract types on a consistent basis.
When the IASB was established in 2001 there were no international financial reporting requirements for insurance contracts. In 2004 the IASB introduced IFRS 4 Insurance Contracts as an interim standard that permitted many existing international accounting practices to be retained, whilst beginning a more comprehensive review of insurance accounting as a second phase of the project. The proposals published today are the result of that review.
The IASB launched its public consultation when it published a discussion paper, Preliminary Views on Insurance Contracts, in 2007. In developing the proposals released today, the IASB considered more than 160 comment letters received on the discussion paper, as well as feedback from interested parties through an extensive outreach programme, including interaction with the IASB’s Insurance Working Group and a targeted field test with preparers. The IASB will undertake further outreach during the exposure draft’s comment period, including a second round of field tests, to ensure that the IASB considers the views of all interested parties before it issues an IFRS.
Commenting on the exposure draft, Sir David Tweedie, chairman of the IASB, said:
A fundamental review of insurance accounting was long overdue, with current practice resulting in financial information that is impenetrable to all but the most expert of users.
The publication of this exposure draft marks an important milestone in this review process. The proposed standard better reflects the economics of insurance contracts, and would result in more relevant, understandable and comparable information being available to investors.
The exposure draft Insurance Contracts is open for comment until 30 November 2010 and can be accessed via the ‘Comment on a Proposal’ section of www.ifrs.org
To find out more, visit the Insurance Contracts section of the IASB website viahttp://go.ifrs.org/insurance_contracts. Materials available on the website include a podcast introduction to the proposals by Warren McGregor, member of the IASB, as well as a high level executive summary of the proposals (Snapshot).
An interactive webcast introducing the proposed standard will be held at 10.00am London time on Friday 6 August, and repeated at 3.00pm London time on the same day for the benefit of interested parties in different time zones.
To register, go to: http://www.ifrs.org/Meetings/Live+webcast+Insurance+accounting.htm
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