On 20 June 2013, the International Accounting Standards Board
("IASB") published, for public comment,
a revised exposure draft of its proposals for accounting for
insurance contracts (the "Proposals").
The Proposals reflect feedback received during the previous
consultation process.
The objective of the Proposals is to provide a more consistent
basis for the accounting for insurance contracts in order to assist
users of financial statements to understand how insurance contracts
affect an entity's financial position, financial performance
and cash flows. The Proposals will enhance comparability
across entities, jurisdictions and capital markets and will apply
to all insurance contracts whether issued by insurers or other
entities.
Key provisions of the Proposals include changes to the ways in
which (a) future profits are estimated and (b) the presentation of
revenue and expenses are captured in financial statements. In
the Proposals, the measurement of the insurance contract liability
is based on the building blocks of discounted, probability-weighted
cash flows, a risk adjustment and a contractual service margin
representing the unearned profit on the contract.
Comments on the Proposals are invited from interested parties
before 25 October 2013.
Please click here to view the Proposals.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.