Insurance Contracts

Date recorded:

This was entirely to an educational session. Two very simple insurance contracts were highlighted, in order to:

  • Focus on the interaction between different parts of the contracts and hence to demonstrate how profits can arise from insurance business.
  • Illustrate how different accounting models deal with such contracts.
At the meeting in September, it was agreed that the Board would discuss:
  • Approaches to deriving risk margins under the DSOP.
  • How the different accounting models behave when faced with changes from the initial assumptions (in particular, it was agreed that there would be some discussion of how the US FAS 97 approach would operate if the lock-in requirement was removed).
  • The impact of applying the DSOP model to non-insurance business, such as airline frequent flyer programs.

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