NU Online News Service, Aug. 25, 3:45 p.m. EDT
A group that represents North American chief financial officers of insurers and reinsurers said the International Accounting Standards Board (IASB) has proposed an "excessively complex" model regarding how certain short-term contracts are valued on insurers' balance sheets.
A draft of the Premium Allocation Approach circulated by the IASB failed in its attempt to establish a simplified model because the same rules cannot be applied to life and non-life companies, said the Group of North American Insurance Enterprises (GNAIE) in an Aug. 19 letter to the IASB.
With the new approach the IASB in essence wound up applying a model to short-term property and casualty contracts that is not meant for them, the GNAIE said.
"While it applies well to life insurance contracts, it does not result in a relevant, reliable, comparable, transparent and understandable accounting for non-life insurance contracts," the GNAIE explained.
The group proposes another measurement for the short-term p&c contracts "based on the use of the existing robust, highly transparent and understandable measurement approach in use for nearly a century," the letter states.
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