The international accounting standard setter has released new proposals for
insurance contracts which seek to demystify one of the most complex areas of
The rules aim to transform current rules, said to be all but indecipherable
for investors, to a model which helps to communicate the contract economics.
David Tweedie, chairman of the International Accounting Standards Board,
described new rules as long overdue and believes the proposals will better
reflect the substance of insurance transactions.
“Current practice [results] in financial information that is impenetrable to
all but the most expert of users,” he said.
“The proposed standard better reflects the economics of insurance contracts,
and would result in more relevant, understandable and comparable information
being available to investors.”
The board has proposed a “building block approach” which focuses on the
timing and uncertainty of future cash flows and relies on drivers of
The proposals will be exhibited for comment until 30 November.
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