New Zealand

Details

  • Service: Audit, Advisory, Accounting Advisory Services
  • Industry: Financial Services, Insurance
  • Type: Regulatory update
  • Date: 30/04/2012

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 Elaine Hultzer

Elaine Hultzer

Partner - Audit, Financial Services

+64 9 363 3228

ehultzer@kpmg.co.nz

Insurance

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IFRS Insurance newsletter - Issue 25 

Moving toward global insurance accounting                           24 April 2012

 

This edition highlights the results of the IASB and FASB discussions in April 2012 on the joint insurance contracts project. In addition, it provides the current status of the project and an expected timeline for completion.

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Highlights

 

  • Boards decide the single/residual margin for retroactive reinsurance contracts should be released over the settlement period.


  • Boards decide on the accounting for loss-sensitive features in reinsurance contracts.

 

  • The FASB decides that the cedant should account for reinsurance contracts using the
    same approach that it uses to account for the underlying direct insurance contracts.

 

  • The IASB decides the cedant would be permitted to use the premium allocation approach if it would produce measurements that are a reasonable proxy to the building-block approach.

 

  • Boards decide the reinsurer should evaluate whether the reinsurance contract should be accounted for under the building-block approach or premium allocation approach in the same manner in which an insurer should evaluate a direct insurance contract.

 

  • Boards decide that when applying unbundling and disaggregation, policy loans should be considered in determining the amount of the
    investment component to which they relate.

 

  • Boards decide on the treatment of contract riders, contract modifications, and reinsurance commutations.

 

  • Educational sessions held on the accounting for the single margin and the use of other comprehensive income for liability measurement.
 

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