EFRAG draft comment letter on insurance contracts

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

06 Aug, 2013

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB's revised Exposure Draft (ED) on insurance contracts. The revised ED was published on 20 June 2013 and originally issued in July 2010.

EFRAG appreciates the large number of changes that ED/2013/7 Insurance Contracts shows in comparison with the 2010 ED and supports most of those changes. However, EFRAG also voices some concerns:

  • EFRAG believes that the IASB’s proposals in the ED in combination with the classification and measurement requirements in other standards will not help to eliminate accounting mismatches and would result in reporting the insurance performance split across profit or loss and OCI.
  • EFRAG also suggests that the IASB should acknowledge the long-term oriented investment business model of insurance activities in the requirements.
  • In respect of the proposed measurement and presentation exception, EFRAG voices several concerns (starting point of the proposed ‘mirroring’, scope, measurement basis, and presentation).

Regarding the proposed measurement and presentation exception, EFRAG is currently considering an alternative proposal developed by the insurance industry that might, wholly or partly, address EFRAG's concerns. The alternative is described in an appendix to the draft comment letter, however, EFRAG has not yet formed a view on the approach and has not yet assessed its technical details, operational complexities or conceptual/technical merits.

Please click for the draft comment letter and a corresponding press release on the EFRAG's website. Comments on the draft comment letter are requested by 18 October 2013.

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