IASB September 2008

The discussion paper (DP) Preliminary Views on Insurance Contracts proposed three building blocks for use in measuring insurance liabilities. The DP suggested that an informative and concise name for the resulting measurement is ‘current exit value’.

Several respondents to the DP advocated a measurement that reflects the fact that the insurer intends (and in most cases must) settle the liability by paying the contractual benefits as they become due, rather than by transferring the liability to a third party. The Board discussed:

• why various respondents prefer this notion to current exit value (the measurement attribute proposed by the DP).
• similarities and differences between this notion and current exit value.
• whether this notion corresponds to something that could be described as an attribute of the liability.

The session was educational and no decisions were made.

Next steps

In October the Board will review a list of measurement approaches that the staff view as viable candidates for selection in the case of insurance liabilities. The session will be educational.