Insurance – Focus on participating contracts

Insurance – Focus on participating contracts

This IFRS newsletter brings you the latest on the IASB’s insurance project.

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We examine the latest developments, and what the discussions could mean for you.

Contracts with participating features remained central to the IASB’s discussions as it presented an education session in March. 

The Board continued to discuss whether, and in what circumstances, adaptations may be needed to the general insurance contracts model to accommodate such contracts.

It focused on three key issues that were identified in previous education sessions. The staff did not ask for any decisions.

For more detail on these discussions, read Issue 44 of our IFRS Newsletter: Insurance. Previous issues can be found on our Newsletters web page.

Three key issues discussed

  • Should the contractual service margin be adjusted (‘unlocked’) to reflect changes in an entity’s share of underlying items? If so, then how and for which contracts? 
  • How should the CSM be recognised in profit or loss?
  • How should a company determine interest expense to be presented in profit or loss or, if it is permitted, in other comprehensive income?

For each question above, this newsletter summarises the staff recommendations and discussions with Board members, and highlights key differences from alternative proposals made in November 2014 by the European CFO Forum. 

Expected timeline

The Board's discussions are ongoing. We currently expect it to complete its deliberations in 2015, and to release a final standard in early 2016.

Visit our IFRS – Insurance hot topics page for the latest developments in the insurance contracts project.

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