The International Accounting Standards Board (IASB) has decided to re-expose its proposals on the insurance contract project which is intended to provide a single source of principle-based guidance on insurance standards.
The IASB met last week and decided that proposals should be re-exposed with feedback being sought only on a limited range of questions.
IASB said the deliberations on the project are not complete but given the late stage of the discussions, issuing a new exposure draft will provide greater certainty to the market.
IASB chairman Hans Hoogervorst said that insurance companies and pension funds are facing difficulties in the current low interest environment.
“As such we realise the importance of establishing a workable standard based on current measurement as soon as possible. However, it is of equal importance that we get this standard right,” Hoogervorst said.
The standard setter said it is looking for comments in relation to the following requirements:
- treatment of participating contracts,
- presentation of premiums in the statement of comprehensive income,
- treatment of the unearned profit in an insurance contract,
- presenting, in other comprehensive income, the effect of changes in the discount rate used to measure the insurance contract liability, and
- the approach to transition.
Hoogervorst added that a targeted re-exposure is the right decision because limiting the scope of the feedback avoids re-opening issues already agreed upon.