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Insurance contracts

Date recorded:

Andrea Pryde (IASB Staff) made a presentation of the status of IASB’s project, the expected comment period and plans for outreach during the comment period and redeliberations. 

These outreach plans include

  • raising awareness of proposals and encourage high quality comment letters
  • testing operationality and identifying implementation issues
  • obtaining input to assess costs and benefits of proposals. 

The focus of the outreach would be:

  • whether the proposals provide users of financial statements with useful information
  • understanding how the proposals affect preparers, particularly those who have not had the resources to follow the project closely during deliberations. 

The discussion of the comment letters received by the IASB and FASB will be presented to a joint meeting (most probably in early 2014).

A Council member asked whether the IASB had considered convening an implementation group, similar to that being established for revenue, and  re-iterated the desire of the insurance industry for a big bang (i.e. implement IFRS 9, insurance contracts, and possibly revenue, at the same time).

Ms Lloyd noted that the Staff is looking at how to support the implementation of the new Standards.  It would be a strong candidate for discussion with the Council at the October 2013 meeting.

A Council member suggested that the Staff needs to raise awareness that it is not an industry standard, but a transaction-based standard.  In response, the staff noted that the IASB was aware of this issue and had tried to scope many of the ‘insurance-type’ service contracts into the forthcoming revenue standard.

The Chairman noted that the Council remains concerned with the differences that continue to exist between the FASB and IASB.  However, pleased to see the plan for joint discussion of responses.

Mr Mackintosh noted that the FASB and IASB start from different places and have come to different conclusions on some issues.  Those issues have been re-debated and either board is unlikely to change their views.

Mr Cherry noted that the IFRS world is weary of this project, and needs a Standard.  The IASB is asking the right questions in the ‘convergence space’, but needs to work towards a final standard.

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