Insurance accounting newsletter

The Insurance Accounting Newsletter provides a monthly update on the development of the new accounting requirements and a summary of Deloitte’s own understanding of the progress being made by the Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB.)

• December 2011 - Refining divergent positions and a gleam of hope from IFRS 9 planned revisions
  The IASB and the FASB continue to remain divided on the fundamental issues of accounting for the uncertainty surrounding insurance risk and the associated emergence of profit from in-force business. However, in November the IASB unanimously agreed to consider targeted improvements for IFRS 9 “Financial Instruments”.
• August 2011 - The post-Tweedie insurance project: an uncertain horizon
  The greatly reduced pace of progress, with a little more than six hours of activity from the IASB and FASB over June and July, forewarned a further delay in the target publication date for the new insurance IFRS. The release date for the new insurance IFRS has now been pushed back to the second half of 2012, with re-exposure likely in the next six to eight months.
• June 2011 - Progress continues, divergence remains
  The IASB and the FASB resumed their joint deliberations after the April pause for reflection. A number of tentative decisions were made, some of which delivered disappointing disagreements between the two Boards. Topics covered included short-term duration contracts, accounting mismatch, unbundling, margins and purchased reinsurance accounting.
• April 2011: Project timetable extended by a few months
  The joint meetings between the IASB and FASB Boards have continued with reduced pace in April. The plan for the next few months seems uncertain though, in view of the chairmen of the two Boards indicating that the insurance project may be pushed out a number of months to allow for a satisfactory resolution of all the remaining issues.
• March 2011: “Unsuccessful efforts” split the Boards
  The Boards held a number of meetings in February and March, with nearly twenty hours of deliberations on the insurance project. Key topics discussed include acquisition costs, discount rates, the scope of the insurance standard and the definition of an insurance contract.
• February 2011: Gearing up for the last mile
  The IASB and FASB (the Boards) have received more than 300 comment letters. They followed the comment period with three roundtable meetings to speak directly to their constituents and engage them openly on the more salient comments that had been raised in the voluminous feedback received.
• August 2010: The start of a new accounting era
  On 30 July, the IASB published an Exposure Draft (ED) that fundamentally revises International Financial Reporting Standard 4, Insurance Contracts. This ED is the latest step in developing an entirely new insurance accounting standard that will complete Phase II of the IASB’s Insurance Contract project. The comment period closes on 30 November and the final standard is due to be released in June 2011.
• July 2010: Last minute convergence
  The lASB and FASB held four meetings in June. They resolved a number of major long standing disagreements, including acquisition costs and participating contracts. The only main difference remaining is on whether the measurement model should use a risk margin approach to reflect the underlying uncertainty.
• June 2010: Almost there...
  The IASB and FASB continued with their regular meetings in May and managed to address most of the remaining issues to be covered by the Exposure Draft, which will likely be published before the July meeting of the IASB.
• May 2010: Steady, if slow progress
  After another long week of joint meetings during the month of April, the IASB and FASB have prepared the ground for a last attempt to resolve the major disagreements. The date of the exposure draft publication has officially been moved to June.
• April 2010: Standard setting crunch time
  Following meetings in March between the IASB and FASB, it now seems likely that an Exposure Draft on insurance accounting will not be published in May as planned. Although several common tentative decisions were reached, a few very significant disagreements emerged, particularly on the subject of risk adjustments and day one calibration.
• March 2010: Insurance accounting taking shape
  The publication date of the Exposure Draft on insurance accounting is fast approaching. As promised, the IASB and FASB have included in their agenda several sessions dedicated to insurance in an effort to meet the May publication deadline. They held two joint meetings in February and at least six are planned for March. This edition reports on the discussions on financial statement presentation, accounting for reinsurance contracts, unbundling and embedded derivatives, and variable or unit-linked type contracts.
• February 2010: The road to convergence
  The IASB and FASB have started the year with a busy schedule of meetings, two joint meetings having already taken place in January. This edition reports on the discussions held in the three hour long meeting of 19 January and the subsequent FASB meeting on 27 January. The long awaited exposure draft is finally taking shape and although a few issues remain unresolved, the road to convergence for insurance accounting is in sight.
• January 2010: Insurance global GAAP in the making
  The FASB and the IASB held joint meetings during December and early January at which they re-confirmed their commitment to convergence. At these meetings, they worked through the differences on the measurement model and agreed on new accounting principles that eliminate most of their fundamental disagreements. The expected publication date of the Exposure Draft has now been pushed back to May 2010 with a comment period until September 2010.

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