IASB publishes exposure draft for new IFRS – Insurance Contracts

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29 Jul, 2010

The IASB has published for public comment an exposure draft of a proposed IFRS for insurance contracts. Exposure Draft ED/2010/8 'Insurance Contracts' proposes a single IFRS that all insurers, in all jurisdictions, could apply to all contract types on a consistent basis. The proposed IFRS would apply to writers of both insurance and reinsurance contracts.

A summary of the key proposals follows:

Scope and recognition

The proposed IFRS would apply to all insurance contracts as defined. An insurance contract would be recognised at the earlier of:

  • the insurer being on risk to provide coverage to the policyholder for insured events; and
  • the signing of the insurance contract.

An insurer would derecognise an insurance liability when it is extinguished.


Measurement of the insurance contract is based on a 'building block approach' that portrays a current assessment of the contract, using the following:

  • an unbiased, probability-weighted average (expected value) of future cash flows expected to arise as the insurer fulfils the contract;
  • the effect of time value of money; and
  • a margin.

The building blocks would be used to measure the combination of rights and obligations arising from an insurance contract rather than to measure the rights separately from the obligations. The combination of rights and obligations would be presented on a net basis.


With respect to disclosure, the ED proposes that entities should disclose qualitative and quantitative information about:

  • the amounts, recognised in its financial statements, arising from insurance contracts; and
  • the nature and extent of risks arising from insurance contracts.

ED/2010/8 is open for comment until 30 November 2010. Click for:

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