Several key issues surfaced from the comment letters, three public roundtable discussions, and other outreach efforts regarding the IASB's July 2010 exposure draft (ED) and the FASB's related September 2010 discussion paper (DP) setting out proposed changes to insurance accounting. The proposals would fundamentally change the accounting by insurers and other entities that issue contracts with insurance risk, and cover recognition, measurement, presentation, and disclosure for insurance contracts. The boards have been redeliberating the issues, and the IASB seems intent on continuing at a rapid pace to meet its targeted June 2011 date for issuance of a final standard. No official timetable has been published by the FASB on its next steps, but comments have been made at recent FASB meetings about the potential for an exposure draft to be released around the same time as the IASB final standard.
Respondents' preferences on the overall measurement model were mixed, with US constituents tending to support the FASB approach (in the event of a converged standard), and a clear majority of non-US constituents supporting the IASB approach. Given the potential impact of the changes being considered, management should keep abreast of this rapidly developing project and consider assessing the implications of the possible changes on existing contracts and its current business practices. This DataLine provides a brief summary of the FASB DP and IASB ED along with a detailed analysis of the comments received on both the DP and ED for major issues, as well as the steps the boards have taken through February 2011 to address constituent observations and concerns.
* The At a glance (third bullet), Building block approach (paragraphs 26 and 27 and PwC observation), Discount rate (paragraphs 42 and 43), and Simplified method for short duration contracts (paragraph 47 and PwC observation) sections were revised to reflect the Boards' decisions at their March 1-2 joint meeting.