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Insurance - Insurance Contracts (2010 Exposure Draft)


In July 2010 the IASB published an exposure draft (ED) on Insurance Contracts. The exposure draft is part of the second phase of the IASB's project on insurance contracts and proposes a comprehensive measurement approach for all types of insurance contracts, and adresses recognition, presentation and disclosure. The exposure draft builds on proposals contained in the IASB's discussion paper Preliminary Views on Insurance Contracts published in May 2007.   

The exposure draft proposes a single measurement model that focuses on a current assessment of the amount, timing and uncertainty of the future cash flows that the insurer expects its existing insurance contracts to generate as it fulfils them. The proposed measurement model uses 'building blocks' to measure an insurance liability.

In December 2010, EFRAG issued its Comment Letter on the ED in which it supported many of the proposals, including the proposals on measurement based on fulfilment cash flows and the building block approach.

EFRAG also expressed some concerns to the proposals:

EFRAG did not believe the IASB had sufficiently considered; the interaction with IFRS 9, the questions what constitutes the performance of an insurer, and the presentation of performance in the financial statements of an insurer.

Other concerns related to the subsequent measurement of the residual margin, the summarised margin presentation on the face of the statement of comprehensive income and the transition requirements.

Based on the comments received in response to the ED, the Boards began their re-deliberation activities in December 2010.

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