We have published our comment letter on the Financial Reporting Council’s Financial Reporting Exposure Draft (FRED) 49: ‘Draft FRS 103 Insurance Contracts’. We support the introduction of FRS 103 as a single standard for accounting for insurance contracts under UK GAAP.

In general we welcome the fact that draft FRS 103 is based on IFRS 4 Insurance Contracts and comment that “the incorporation of many of the requirements of FRS 27 Life Assurance and elements from the existing Association of British Insurers Statement of Recommended Practice on Accounting for Insurance Business (ABI SORP) will help to ensure that existing practices are largely preserved under the new regime pending the completion of the IASB’s project on insurance accounting”.

However, we have raised a number of comments in relation to paragraphs 2.2-2.11 of draft FRS 103 which, in line with IFRS 4, “provide a more flexible regime for voluntary changes of accounting policy relating to insurance contracts”. We believe that the improvement options from IFRS 4 “should not form part of the final FRS 103”.

Further comments and full response to all questions raised in the invitation to comment are contained within the full comment letter which can be downloaded below.

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