Insurance Contracts
When the IASB took over from its predecessor organisation, no accounting standard dealing with insurance contracts existed. Accounting practices for insurance contracts were diverse, and often differed from practices in other sectors.
To address the issue and because insurance contracts did not fall within the scope of any other related project (eg IFRSs on provisions, financial instruments and intangible assets) the IASB decided to split the project into two phases:
- Phase I of this project was aimed at addressing the most urgent issues. It was finalised in 2004 and resulted in IFRS 4 Insurance Contracts, an interim standard that permits a wide variety of accounting practices for insurance contracts. Many of these practices differ from those used in other sectors and make it difficult to understand insurers’ financial statements.
- The IASB is currently undertaking Phase II of the project. In this phase the Board intends to develop a standard that will replace the interim standard and that will provide a basis for consistent accounting for insurance contracts on the longer term.
Where are we in the project ?
The Board is reviewing the comments received on the discussion paper Preliminary Views on Insurance Contracts, published in May 2007, and is working towards an exposure draft.
For more information see Meeting Summaries and Observer Notes and the Decisions at a glance.
In June 2009, the Insurance Working Group had its eleventh meeting. At this meeting the Working Group provided input for a number of issues that followed from the Board meetings, from responses to the discussion paper and from the previous working group meeting in November 2008.
Next due process step
The Board aims to publish an Exposure Draft in May 2010 and a final standard in 2011
Is this project part of the Memorandum of Understanding?
In October 2008, the FASB decided to participate in this project, so this is now a joint project. However, the project is not part of the Memorandum of Understanding with the FASB (MoU).
Related projects
There are important interactions with other projects, particularly those on the conceptual framework, revenue recognition, fair value measurement, financial statement presentation, financial instruments, revisions to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and financial instruments with characteristics of equity.
The work on insurance contracts will proceed in parallel with these other projects as much as possible.