On 20 March 2014 the FRC published FRS 103, their standard on insurance contracts accounting under new UK GAAP (FRS 102)
The standard is largely based on IFRS 4 Insurance Contacts but incorporates many elements of FRS 27 Life Assurance and the ABI SORP, largely within the associated implementation guidance. It aims to allow entities, generally, to continue with their existing accounting policies for insurance contracts, however with the need now to increase their disclosures around such contracts, in line with the requirements of IFRS 4.
FRS 103 is effective for accounting periods beginning 1 January 2015 (the same date as FRS 102) with early adoption permitted.
Changes since the exposure draft
FRS 103 largely carries forward the proposals that the FRC previously consulted on in FRED 49 (their exposure draft for FRS 103). However, one welcome change since the exposure draft is that FRS 103 now clarifies that all assets and liabilities arising from foreign currency denominated insurance contacts shall be treated as monetary items for the purpose of foreign exchange translation.
The new standard
The three reports from FRC on FRS 103 Insurance FRS 103 Insurance Contracts, Implementation Guidance to accompany FRS 103 Insurance Contracts and Impact assessment and Feedback statement - FRS 103 Insurance Contracts examine the consolidated accounting and reporting requirements for entities in the UK and Republic of Ireland issuing insurance contracts, together with guidance.
A two page 'Straight-Away' publication summarising the new standard has been produced .
Download for more general guidance on implementing the new UK GAAP regime.
If you have any questions or would like any additional information, please use the contact details on this page or speak to your usual PwC contact.