The staff updated the IASB on the input received from the Insurance Working Group (IWG) meeting held on 25-26 June.

The staff led the discussion referring the Board members to agenda papers summarising the feedback from the IWG. The staff summarised three main observations from the IWG members as follows:

1. There is desire for one single, converged standard yet the need to balance this with quality and timeliness remains a high priority for all IWG members
2. There is a level of disappointment with the inability to reconcile certain differences between IASB and FASB
3. There is a need for the Boards to assess unintended consequences through field testing.

In addition, the staff discussed feedback on the remaining issues the project faces including the costs and complexities of the recently approved “OCI solution”, the earned premium proposal for presenting volume information and the opening balance sheet on transition date.

Concerns expressed over the OCI solution centred on the accounting mismatch that would arise from requiring changes in the insurance liability to be presented in OCI when not all assets will be required at FVTOCI.

On the earned premium discussion, there was continued emphasis on the need for volume indicators but concern that the costs of the earned premium approach would be disproportionate to the benefits achieved because (1) revenue is a less important indicator of profitability for insurers than other entities and (2) the proposed metric would be a new metric not currently used by life insurers.

IWG members also discussed and had differing views on transition. While the proposal in the original exposure draft was universally rejected, many views were expressed at the meeting. Some considered retrospective application given the fact that the transitional provisions would have a significant effect for many years beyond the transition balance sheet due to the long-term nature of insurance liabilities.

No decisions were made and the session ended. The Boards will continue discussions on the Insurance Contracts project in September.