Insurance Contracts—Joint Project of the FASB and IASB
Last updated on December 2, 2013. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)
This project update summarizes the project activities and decisions of the FASB and IASB (the Boards). It was prepared by the staff and is for the information and convenience of the Boards’ constituents. All decisions of the Boards are tentative, may change at future Board meetings, and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process.
Due Process Documents
Decisions Reached at Last Meeting
Summary of Decisions Reached to Date
Board/Other Public Meeting Dates
DUE PROCESS DOCUMENTS
Exposure Draft, Insurance Contracts (June 27, 2013)
On June 27, 2013, the FASB issued a proposed Accounting Standards Update, Insurance Contracts (Topic 834). The FASB invites individuals and organizations to comment on the proposed Update. Responses from those wishing to comment must be received by October 25, 2013 and can be submitted through an electronic feedback form or in the form of a written letter. A link to the electronic feedback form is provided below. Comments in the form of a written letter should be submitted by email to email@example.com, File Reference No. 2013-290. Those without email should send their comments to “Technical Director, File Reference No. 2013-290, FASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116.”
The main objectives of the guidance in this proposed Update is to increase the decision usefulness of the information about an entity’s insurance liabilities, including the nature, amount, timing, and uncertainty of cash flows related to those liabilities, and the related effect on the statement of comprehensive income, and to provide comparability, regardless of the type of entity issuing the contract. The guidance in this proposed Update would require an entity to measure its insurance contracts under one of two measurement models, referred to as the building block approach and the premium allocation approach. The proposed Update would improve convergence of U.S. GAAP and IFRSs by moving towards a more globally comparable standard.
- Download the Exposure Draft
- Read the press release introducing the proposed Update
- Read the FASB in Focus—General Overview
- Read the FASB in Focus—Scope Overview
- Use the electronic feedback form to provide comments on the proposed Update
- View the FASB podcast
- Download the
used in the podcast.
Discussion Paper, Preliminary Views on Insurance Contracts (September 17, 2010)
On September 17, 2010, the FASB issued, for public comment, a Discussion Paper, Preliminary Views on Insurance Contracts. The Discussion Paper includes a comparison of the IASB’s Exposure Draft, Insurance Contracts (issued July 30, 2010), the FASB’s preliminary views, and current U.S. generally accepted accounting principles (GAAP). The comment period for the IASB Exposure Draft ended on November 30, 2010. The comment period for the Discussion Paper ended on December 15, 2010.
- Download the FASB Discussion Paper.
- Read the Comment Letters on the FASB Discussion Paper
- Read the press release introducing the FASB Discussion Paper.
- Download the IASB Exposure Draft.
- Read the Comment Letters on the IASB Exposure Draft.
- Read a summary of User Outreach.
- Thursday, December 9, 2010 in Tokyo, Japan
- Thursday, December 16, 2010 in London, United Kingdom
- Monday, December 20, 2010 in Norwalk, Connecticut, USA
Invitation to Comment, An FASB Agenda Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, Including the IASB Discussion Paper, Preliminary Views on Insurance Contracts (August 2, 2007)
On August 2, 2007, the FASB issued an Invitation to Comment, An FASB Agenda Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, Including the IASB Discussion Paper, Preliminary Views on Insurance Contracts. The IASB Discussion Paper (issued May 2007) set forth the IASB’s preliminary views on the main components of an accounting model for an issuer’s rights and obligations (assets and liabilities) under an insurance contract. The comment period for both documents ended November 16, 2007.
- Download the FASB Invitation to Comment.
- Read the Comment Letters on the FASB Invitation to Comment
- Download the IASB Discussion Paper.
- Read the Comment Letters on the IASB Discussion Paper.
PROJECT OBJECTIVEThe objective of this joint IASB/FASB insurance contracts project is to develop common, high-quality guidance that will address recognition, measurement, presentation, and disclosure requirements for insurance contracts (including reinsurance), even if the contracts are not issued by an insurance entity. Specifically, the project is intended to improve, simplify, and converge the financial reporting requirements for insurance contracts and to provide investors with decision-useful information.
*Outreach/Field WorkPublic Roundtable Meetings
The FASB will host public roundtable meetings on its June 27, 2013 Proposed Accounting Standards Update, Insurance Contracts (Topic 834).
The roundtable meetings are an important part of the Board’s due process on the Exposure Draft. The meetings will provide an opportunity for those that have submitted a comment letter, or who still intend to submit a comment letter, to request to discuss the proposal with the Board in further detail. To ensure that the Board receives input covering a variety of perspectives, the Board is seeking participation from preparers, auditors, investors, and others.
The public roundtable meetings are scheduled as follows:
- Monday, December 2nd at the FASB office in Norwalk, Connecticut
- 401 Merritt 7
Norwalk, CT 06856
- Session 1: 9:00 a.m. – 12:00 p.m. EST (discussion will include topics specific to the Building Block Approach)
- Session 2: 1:00 p.m. – 4:00 p.m. EST (discussion will include topics specific to the Premium Allocation Approach)
- 401 Merritt 7
- Monday, December 16th at the Westin O'Hare Hotel in Rosemont, Illinois
- 6100 North River Road
Rosemont, Illinois 60018
- 1:00 p.m. – 5:00 p.m. CST (discussion will include scope considerations, topics related to the Building Block Approach and Premium Allocation Approach, and considerations specific to nonpublic and medium-sized entities)
[The previously scheduled morning meeting has been cancelled.]
- 6100 North River Road
Seats for observers will be made available wherever possible, although these cannot be guaranteed for all meetings. In cases where seats are available, spaces will be limited. Registration is on a first-come basis. Observers may not participate in the discussion. Anyone wishing to observe the roundtable meeting on December 16, 2013 in Rosemont, Illinois should register on the FASB’s website (observer registration for both December 2, 2013 Norwalk roundtable sessions is now closed). Please include your name, organization, your roundtable location preference, and confirmation that you wish to attend as an observer (rather than as a participant).
On Tuesday, July 30, the FASB hosted IN FOCUS: The Insurance Contracts Project-Part I, Scope. The webcast featured FASB member Hal Schroeder and FASB staff members discussing the proposal and answering questions submitted by viewers. For more information, click here.
On Thursday, August 1, the FASB hosted IN FOCUS: The Insurance Contracts Project-Part II, The Models. The webcast featured FASB members Tom Linsmeier and Marc Siegel, as well as FASB staff members discussing the proposal and answering questions submitted by viewers. For more information, click here.
DECISIONS REACHED AT LAST MEETING (MAY 23, 2013)
The FASB continued its discussions of the proposed insurance contracts standard.
The Board reviewed the costs and benefits of the decisions reached in the insurance contracts project as well as the effects of the proposed Accounting Standards Update on financial reporting complexity.
The staff was authorized to proceed to a vote on the proposed Accounting Standards Update by written ballot.
The Board also decided to hold public roundtable meetings following the comment letter period to consider the views of, and obtain information from, interested stakeholders about the proposed Update. The dates, times, and information about how to participate in a public roundtable will be announced separately at a later date.
*SUMMARY OF DECISIONS REACHED TO DATESee the proposed Accounting Standards Update, Insurance Contracts (Topic 834).
The Board will begin redeliberations after the end of the comment period of the Exposure Draft. During the comment period, the Board will undertake various outreach activities (for example, webcasts, fieldwork, roundtable meetings, etc.) to discuss proposals with a wide range of interested parties. The Board plans to consider all feedback and begin redeliberations of all significant issues in the fourth quarter 2013.
Please refer to the Current Technical Plan for information about project timeline.
BOARD/OTHER PUBLIC MEETING DATES
The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
|May 23, 2013||Board Meeting—Cost-benefit analysis and consideration of complexity, authorization to ballot|
|March 6, 2013||Board Meeting—Treatment of changes in estimated interest crediting and accretion rates, election of the fair value option, other miscellaneous issues|
|February 27, 2013||Board Meeting—Presentation, Disclosure|
|February 20, 2013||Board Meeting—Segregated assets related to direct performance linked insurance contracts, accretion of interest on the margin|
|February 13, 2013||Board Meeting—Reconsideration of the measurement of investment components and the aggregate insurance contracts revenue, transition, effective date and comparative financial statements, early adoption, and comment period|
|February 6, 2013||Board Meeting—Accounting for guarantees, Modifications of insurance contracts, Foreign currency transactions|
|January 30, 2013||Joint Board Meeting—Allocation of insurance contract revenue—change in pattern of expected claims, Considering the transition proposals in the light of subsequent decisions on insurance contracts revenue|
|November 20, 2012||Joint Board Meeting—Discount Rate - Components of Contracts Cash Flows to Which Mirroring Does Not Apply but That Are Affected by Expected Asset Returns|
|November 20, 2012||Board Meeting—Scope - Guarantee Contracts|
|November 14, 2012||Board Meeting—Ceding Commissions, Business Combinations and Portfolio Transfers, Participation Features of Mutual Insurance Companies|
|October 17, 2012||Joint Board Meeting—Presentation in statement of comprehensive income comparison of methods, non-claims fulfillment costs, and acquisition costs|
|October 15, 2012||Joint Board Meeting—Premium allocation approach discount rate follow up, and participating contracts|
|October 15, 2012||Board Meeting—Re-designation of financial assets|
|October 3, 2012||Board Meeting—Measurement of the Aggregate Premium for the Insurance Component|
|September 24, 2012||Joint Board Meeting—Acquisition Costs in the Pre-coverage Period, Transition Requirements|
|September 5, 2012||Board Meeting—Unlocking of the Single Margin|
|August 1, 2012||Board Meeting—Charitable Gift Annuities|
|July 25, 2012||Board Meeting—Title Insurance Contracts, Advertising Costs: Direct Response Advertising|
|June 12, 2012||Joint Board Meeting—Earned Premiums, Unbundling: Allocation of Cash Flows|
|May 22-24, 2012||Joint Board Meeting—Acquisition Costs, Separation of Investment Components from the Insurance Contract, Summary of Separation Approaches, The Use of OCI|
|April 18, 2012||Joint Board Meeting—Reinsurance, Contract Modifications, Riders and Policy Loans|
|March 21, 2012||Joint Board Meeting—Unit of Account, Separation of Investment Components from the Insurance Contract|
|March 7, 2012||Board Meeting—Financial Instruments with Discretionary Participation Features|
|February 27, 2012||Joint Board Meeting—Eligibility Criteria for the Premium Allocation Approach, Mechanics for the Premium Allocation Approach, Measurement of Liabilities for Infrequent, High-Severity Events, Onerous Contracts, Unbundling Goods and Services Components, Financial Instruments with Discretionary Participation Features (IASB only)|
|December 15-16, 2011||Joint Board Meeting—Participating Contracts, Discounting of the Liability for Incurred Claims, Unit of Account, Onerous Contracts|
|November 30, 2011||Board Meeting—Accounting for Participation Features|
|November 16, 2011||Joint Board Meeting—Disaggregation of Explicit Account Balances|
|October 20, 2011||Joint Board Meeting—Fixed-Fee Service Contracts, Premium Allocation Approach, Statement of Financial Position, Statement of Comprehensive Income|
|September 19, 2011||Joint Board Meeting—Risk Adjustment and Disclosures|
|September 7, 2011||Board Meeting—Single Margin and Liability for Incurred Claims|
|July 21, 2011||Joint Board Meeting—Premium Allocation Approach|
|June 15, 2011||Joint Board Meeting—Statement of Comprehensive Income|
|June 13, 2011||Joint Board Meeting—Residual Margin and Acquisition Costs|
|May 31, 2011||Joint Board Meeting—Reinsurance|
|May 17-18, 2011||Joint Board Meeting—Risk Adjustment|
|May 11, 2011||Joint Board Meeting—Policyholder Participation|
|May 4, 2011||Joint Board Meeting—Unbundling|
|April 27, 2011||Joint Board Meeting—Modified Approach|
|April 12, 2011||Joint Board Meeting—Discount Rate|
|March 29, 2011||Joint Board Meeting—Unlocking the Margin and the Insurance Working Group Meeting|
|March 22, 2011||Joint Board Meeting—Risk Adjustment and Contract Boundary|
|March 21, 2011||Joint Board Meeting—Risk Adjustment, Discount Rate, and Unbundling|
|March 15, 2011||Joint Board Meeting—Risk Adjustment, Discount Rate, Initial Recognition, and Definition|
|March 14, 2011||Joint Board Meeting—Presentation, Composite Margin, and Discount Rate|
|March 2, 2011||Joint Board Meeting—Scope, Field Tests, Uncertainty, and Acquisition Costs|
|March 1, 2011||Joint Board Meeting—Discounting and Scope|
|February 18, 2011||Joint Board Meeting—Discount Rate, Cash Flows, Risk Adjustment, Recognition, Residual or Composite Margin, and Presentation|
|February 17, 2011||Joint Board Meeting—Project Axioms and Assumptions, and Discount Rate|
|February 16, 2011||Joint Board Meeting—Unbundling|
|February 9, 2011||Board Meeting—Changes to U.S. GAAP|
|February 3, 2011||Board Meeting—Discount Rate|
|February 2, 2011||Joint Board Meeting—Acquisition Costs|
|January 19, 2011||Joint Board Meeting—Discount Rate|
|January 18, 2011||Joint Board Meeting—Comment Letter Summaries|
|December 15, 2010||Joint Board Meeting—Project Review and Outreach Summary|
|July 28, 2010||Board Meeting—Modified Approach|
|July 19, 2010||Joint Board Meeting—Unbundling, Unit-Linked Contracts, Modified Approach, and Investment Contracts with Discretionary Participating Features|
|June 23, 2010||Joint Board Meeting—Cash flows, Acquisition Costs, Participating Contracts, Unbundling, Presentation, Residual or Composite Margin|
|June 15 & 16, 2010||Joint Board Meeting—Cash Flows, Foreign Currency, Risk Adjustment, Reinsurance, Acquisition Costs, Residual or Composite Margin, Participating Contracts, Insurance Risk, Embedded Derivatives, Derecognition, Portfolio Transfers|
|June 10, 2010||Joint Board Meeting—Participating Contracts and Risk Adjustment|
|June 9, 2010||Board Meeting—Modified Approach|
|June 1, 2010||Joint Board Meeting—Transition, Portfolio Transfers, and Business Combinations|
|May 19, 2010||Joint Board Meeting—Unbundling and Scope|
|May 18, 2010||Joint Board Meeting—Residual Margin, Risk Adjustment, Composite Margin, Unit of Account, and Disclosures|
|May 5, 2010||Board Meeting—Contract Boundaries|
|April 22, 2010||Joint Board Meeting—Discount Rate|
|April 14, 2010||Board Meeting—Use of Other Comprehensive Income|
|March 24, 2010||Joint Board Meeting—Disclosures|
|March 23, 2010||Joint Board Meeting—Risk Adjustment and Participating Contracts|
|March 22, 2010||Joint Board Meeting—Definition and Scope|
|March 17, 2010||Joint Board Meeting—Risk Adjustment|
|March 16, 2010||Joint Board Meeting—Acquisition Costs|
|March 15, 2010||Joint Board Meeting—Residual Margin|
|February 10, 2010||Joint Board Meeting—Reinsurance and Policyholder Accounting|
|January 27, 2010||Board Meeting—Policyholder Behavior and Deposit Floor|
|January 19, 2010||Joint Board Meeting—Measurement Approach, Risk Adjustment, Recognition, Residual Margin, and Policyholder Behavior|
|January 5, 2010||Joint Board Meeting—Unbundling, Presentation, and Embedded Derivatives|
|December 16, 2009||Joint Board Meeting—Measurement Approach and Risk Adjustment|
|November 24, 2009||Board Meeting—Recognition, Embedded Options, and Derecognition|
|November 18, 2009||Joint Board Meeting—Participating Contracts|
|October 28, 2009||Joint Board Meeting—Scope, Measurement Approach, Acquisition Costs, and Presentation|
|July 23, 2009||Joint Board Meeting—Fulfillment Value and Acquisition Costs|
|July 21, 2009||Board Meeting—Risk Adjustment, Measurement Approach, and Discounting|
|May 18, 2009||Board Meeting—Risk Adjustment and Acquisition Costs|
|April 2, 2009||Board Meeting—Cash Flows|
|February 25, 2009||Board Meeting—Measurement Approach for Insurance Contracts|
|October 29, 2008||Agenda decision announcement|
BACKGROUND INFORMATIONIn 2002, the IASB decided to address accounting for insurance contracts in a two-phase project. The first phase of the project was completed in May 2004 with the issuance of International Financial Reporting Standard (IFRS) 4, Insurance Contracts, which provided temporary guidance for insurers adopting IFRSs in 2005. IFRS 4 made limited improvements to accounting practices for insurance contracts, permitted a wide variety of practices to continue, and avoided major changes that might be reversed upon completion of the second phase.
As part of the second phase of the project, in May 2007, the IASB issued a Discussion Paper, Preliminary Views on Insurance Contracts, which focused on developing a comprehensive accounting model for an insurer’s rights and obligations (insurance assets and liabilities) arising from insurance activities.
In August 2007, the Board issued an Invitation to Comment, An FASB Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, which included the IASB’s Discussion Paper. The Board received 45 comment letters in response to the Invitation to Comment, which led to its decision in October 2008 to participate in the project jointly with the IASB. Since then, the Boards have held more than 20 meetings to discuss various proposals to develop a common standard for insurance contracts. Although the project on insurance contracts is a joint project, it is not part of the Boards’ Memorandum of Understanding that was issued to acknowledge their commitment to the development of high-quality, compatible accounting standards and further the convergence of U.S. GAAP and IFRSs.
The IASB published an Exposure Draft on financial reporting for insurance contracts on July 30, 2010, which, when finalized, will replace IFRS 4. In developing the IASB’s Exposure Draft, most of the discussions about the proposed insurance accounting approaches were held jointly with the FASB. While the Boards reached common decisions in many areas, they reached different conclusions in others. Some Board members prefer the IASB’s proposed approach; however, the majority prefers an alternative approach. Regardless of Board members’ individual views and uniform commitment to convergence, the Board determined that additional information was needed about whether the possible new accounting guidance would represent a sufficient improvement to U.S. GAAP to justify issuing new guidance. On September 17, 2010, the Board issued, for public comment, a Discussion Paper, Preliminary Views on Insurance Contracts.
For additional and current information concerning the IASB’s insurance contracts project visit the IASB Insurance Contracts Project page.
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