At its meeting on January 19-20, 2016, the IASB met to deliberate the remainder of the planned technical decisions on the accounting for insurance contracts. The Board

1. tentatively decided to require a loss for onerous contracts to be recognized only when the contractual service margin is negative for a group of contracts, and that the group should comprise contracts that at inception: (a) have cash flows that the entity expects will respond in similar ways to key drivers of risk in terms of amount and timing; and (b) had similar expected profitability;
2. instructed the staff to develop the wording during the drafting process to improve the clarity of the requirements in respect of the allocation of the contractual service margin;
3. tentatively decided that there should be no exception to the level of aggregation for determining onerous contracts or the allocation of the contractual service margin when regulation affects the pricing of contracts; and
4. tentatively decided to require an entity to specify at the inception of the contract how it viewed its discretion under the contract, and to use that specification to distinguish between the effect of changes in market variables and changes in discretion.

The Board have now completed the planned technical decisions on the accounting for insurance contracts. At the Board’s February 2016 meeting, the staff plan to ask the Board to review the due process steps taken in developing the new Insurance Contracts Standard and to ask permission to begin the balloting process.

Review the IASB Update on the IASB's Web site.