Progress to date

Insurers currently use a variety of different and largely inconsistent local approaches to measure the value of insurance contracts within their statutory financial statements. This diversity makes it difficult to compare companies and may fail to reflect the true economic value of insurance business, which can put insurers at a considerable disadvantage when competing for capital.

The International Accounting Standards Board (IASB) is working alongside the US Financial Accounting Standards Board (FASB) to develop a harmonised IFRS for insurance contracts, which is due to be issued in 2011 (see timetable).  After much debate, the IASB issued the Exposure Draft on 30 July 2010 and it is open for comment until 30 November (for more information visit http://go.ifrs.org/insurance_contracts).

PwC immediately issued a press release encapsulating it's perspective on the issue of the Exposure Draft and produced a summary of the board's new proposals.

In August, PwC published the 'Practical guide to IFRS - insurance contracts' which explores the key provisions and provides 'at a glance' highlights as well as key observations.

In November, PwC submitted a comment letter on the latest IASB proposals.  We also included additional comments on the discussion paper published by the FSAB in September 2010, which seeks views on the IASB exposure draft, as well as input on the differences in views between the IASB and FASB in the insurance contract project.  This report 'Setting the standard - How to make the proposed insurance accounting standard more useful' summarises our response.

Points of debate

In the development of the Exposure Draft, a number of fundamental issues were debated at length as the views of the IASB and FASB differed. PwC attended various board meetings and the notes produced describe the areas of debate and differing perspectives:

IASB/FASB Insurance Contracts Projects - decisions to date and PwC observations

For updates and analysis please see