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The complexity and variety, combined with the existing diversity in accounting practices under IFRS (which currently permits the continuation of many pre-IFRS insurance-related accounting practices), has created a complex financial reporting challenge for the IASB. Cooper provided an update to investors on some of the enormous progress the IASB has made on the insurance contracts project. He highlighted a few of the changes:
"There are still features that are specific to insurance that need to be captured. And I appreciate that the nature of insurance contracts is sufficiently different to justify a separate accounting Standard. However, basic issues related to liability measurement, reporting the delivery of services, and the recognition and measurement of financial assets are still very similar to those in other industries and transactions. Those similarities will be made more apparent by the four key advances highlighted in this article, and will significantly benefit users of financial statements.
One major issue remains to be resolved, which is the pattern of profit recognition for participating contracts. Participating contracts are complicated by the fact that they provide both insurance protection and a return on underlying financial assets. Consequently, views differ on how the profits of these two components should be recognised. A related question is how much of that profit should be recognised in ‘other comprehensive income’ (OCI), and under what circumstances.
The proposals the IASB put forward in 2013 related to participating contracts were not well supported by some insurance industry groups. Many criticised the exception that the IASB proposed for the measurement of participating contracts as being unnecessary and excessively complex to apply. The IASB is currently considering further analysis of participating contracts, working closely with interested parties."