IASB May 2009

The Board continued its discussion of how an insurer should measure its insurance contracts and decided tentatively:

• that the measurement should include the expected (ie probability-weighted) cash flows (future premiums and other cash flows resulting from those premiums, eg benefits and claims) resulting from those contracts, including those cash flows whose amount or timing depends on whether policyholders exercise options in the contracts.
• that to identify the boundary between existing contracts and new contracts, the starting point would be to consider whether the insurer can cancel the contract or change its the pricing or other terms. The staff will develop more specific proposals for identifying the boundary.

In June, the Board will continue its discussion of the candidate measurement approaches for insurance contracts.