This IFRS newsletter brings you the latest on the IASB’s insurance project.
Substantial progress was made this month in the IASB's quest to find a workable solution for participating contracts.
The Board reached decisions on:
“With the Board’s decision to use a variable fee approach for many participating contracts, the finalisation of the standard becomes attainable in the relatively near future.”
The IASB decided to unlock the contractual service margin for changes in the estimate of the variable fee for service that an entity expects to earn from direct participating contracts.
This fee would be equal to the entity’s expected share of returns on underlying items less any expected cash flows that do not vary directly with underlying items.
Direct participating contracts would be defined as contracts for which:
In addition, the IASB decided that an entity would recognise the contractual service margin in profit or loss on the basis of the passage of time for participating contracts.
At an education session, the IASB discussed feedback on applying IFRS 9 Financial Instruments before the new insurance contracts standard.
The staff’s papers:
The staff expect to ask the IASB for the technical decisions on outstanding issues during the remainder of 2015.
The effective date of the final standard will be discussed after the IASB has concluded its redeliberations on other topics.
A final standard is not expected in 2015.
Visit our IFRS – Insurance hot topics page for the latest developments in the insurance contracts project.
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