The
IASB launched a public consultation on accounting for insurance contracts. The paper proposes that an insurer should measure its insurance liabilities using the following three building blocks:
explicit, unbiased, market-consistent, probability-weighted and current estimates of the contractual cash flows.
current market discount rates that adjust the estimated future cash flows for the time value of money.
an explicit and unbiased estimate of the margin that market participants require for bearing risk (a risk margin) and for providing other services, if any (a service margin).
The paper suggests that an informative and concise name for a measurement that uses the three building blocks is ‘current exit value’. It also defines current exit value as the amount the insurer would expect to pay at the reporting date to transfer its remaining contractual rights and obligations immediately to another entity.
The IASB will publish an exposure draft by end of 2008. The IASB expects the new standard to be in place in 2010.
Deadline for consultation is 16 November 2007.
From 14 May, the text of the Discussion Paper will be available freely from the IASB’s Website.
Press release
© IASB - International Accounting Standards Board
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