Insurance Contracts

Date recorded:

The Board discussed measurement issues from Chapter 3 of the Draft Statement of Principles (DSOP) on Insurance Contracts that the IASC Steering Committee has developed. The Board also considered two alternative approaches to performance reporting:

  • The traditional insurance reporting model, which separates underwriting and investing and financing activities, and
  • The reporting model proposed in the DSOP, which would report three components of performance: profit or loss from new business, ongoing profit or loss from prior years' business, and profit or loss from investing and financing activities.
The two approaches to performance reporting differ not only in presentation format but more fundamentally with respect to when profit or loss from insurance contracts should be recognised. The traditional model is a deferral and matching approach. The DSOP proposal is to recognise more profit or loss at the time the contract is entered into. The Board felt that further educational sessions are needed on these issues and made no tentative decisions at this meeting.

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