The Australian Accounting Standards Board
(AASB) proposed to replace the three current Australian insurance
contract accounting standards with a single standard.

AASB ED 201 Insurance Contracts proposes
stricter rules in relation to accounting for profits and expenses
arising from insurance contracts.

The proposal aims to improve consistency in
existing practices and improve comparability across entities,
jurisdictions and capital markets.

The new model would replace AASB 4 Insurance
Contracts, AASB 1023 General Insurance Contracts and AASB 1038 Life
Insurance Contracts.

AASB Chairman Kevin Stevenson said ED 201
would mean insurance companies would account for the costs incurred
in selling insurance contracts the same way, making company results
more comparable.

“Investors should be aware that profits may
appear initially less attractive because of the selling expenses
being recognised up front,” Stevenson said.

The AASB draft is based on the International
Accounting Standards Board’s (IASB) draft insurance standard.

Comments are due to the AASB by 8 November or
to the IASB by 30 November.