FASB to Host Roundtable Meetings on Insurance Proposal | AccountingWEB

FASB to Host Roundtable Meetings on Insurance Proposal

By Jason Bramwell
The Financial Accounting Standards Board (FASB) will host public roundtable meetings in December on its proposed accounting standards update Insurance Contracts (Topic 834).
According to the FASB, the roundtable meetings are an important part of the standard-setting board's due process on the topic's exposure draft. The meetings will provide an opportunity for those who have submitted a comment letter, or who still intend to submit a comment letter, to discuss the proposals with the FASB and the International Accounting Standards Board (IASB) in further detail.
To ensure that the boards receive input covering a variety of perspectives, the FASB and the IASB are seeking participation from preparers, auditors, investors, and others.
The FASB and the IASB are developing an accounting standard for insurance contracts reporting that would improve convergence of US Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) by moving toward a more globally comparable standard.
"The 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," according to an October 2 update on the FASB website. "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."
Insurers currently use a variety of approaches to measure the value of insurance contracts for financial statement reporting purposes, which could make it difficult to compare companies on the same basis and determine the value of an insurance business from an investor's perspective.

FASB Roundtable Meetings on Insurance Contracts

Following are the dates, times, and locations of each public meeting hosted by the FASB on Insurance Contracts (Topic 834):
Date: December 2, 2013
Location: FASB offices, 401 Merritt 7, Norwalk, CT 06856
Meeting times:
Session 1: 9:00 a.m. to noon EST (Discussion will include topics specific to the building block approach.)
Session 2: 1:00 to 4:00 p.m. EST (Discussion will include topics specific to the premium allocation approach.)
Date: December 16, 2013
Location: Westin O'Hare Hotel, 6100 N. River Road, Rosemont, IL 60018
Meeting times:
Session 1: 9:00 a.m. to noon CST (Discussion will focus on issues for nonpublic and medium-sized companies and organizations.)
Session 2: 1:00 to 5:00 p.m. CST (Discussion will include scope considerations and topics related to the building block and premium allocation approaches.)
Those requesting to participate in the roundtables should complete and submit an electronic participant application form on the FASB website by November 1. Observer registration is required in advance; space is limited, so observer registrants will be accepted on a first-come, first-served basis.
The guidance in this proposed update would require an entity to measure its insurance contracts under one or two measurement models, referred to as the building block approach and the premium allocation approach.
According to a June 27, 2013, FASB In Focus on Insurance Contracts (Topic 834), the premium allocation approach would be applied if "the coverage period of an insurance contract is one year or less, or  at contract inception  it is unlikely that during the period before a claim is incurred, there will be significant variability in the expected value of the net cash flows required to fulfill the contract." The building block approach would be applied to all other contracts.
The building block approach would require insurers to measure all expected cash flows for insurance contracts and to update assumptions each reporting period to reflect all available information. 
"Changes in the expected cash flows would be reported in net income, other than for the effect of changes in the discount rates, which would be presented in other comprehensive income, except for contracts that are contractually linked to underlying assets," according to the FASB In Focus
The roundtables on December 2 will be webcast live on the FASB website. Additionally, audio recordings of the roundtable meetings on December 2 and December 16 will be made available on the FASB website shortly after each meeting.
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