Insurance Contracts—Joint Project of the FASB and IASB
Last updated on March 14, 2014. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)
This project update summarizes the project activities and decisions of the FASB and IASB (the Boards). It was prepared by the staff and is for the information and convenience of the Boards’ constituents. All decisions of the Boards are tentative, may change at future Board meetings, and do not change current accounting and reporting requirements. Decisions of the Boards become final only after extensive due process.
Due Process Documents
*Board/Other Public Meeting Dates
NOTE: This page contains information pertinent to the Joint IASB/FASB insurance contracts project. Please refer to the insurance project page for current information about the FASB’s insurance project focusing on targeted improvements to insurance accounting.
PROJECT OBJECTIVEThe 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. 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.
DUE PROCESS DOCUMENTS
Proposed Accounting Standards Update, Insurance Contracts (June 27, 2013)
On June 27, 2013, the FASB issued a proposed Accounting Standards Update, Insurance Contracts (Topic 834).
The main objectives of the guidance in this proposed Update is to increase the decision usefulness of the information about an entity’s insurance liabilities, including the nature, amount, timing, and uncertainty of cash flows related to those liabilities, and the related effect on the statement of comprehensive income, and to provide comparability, regardless of the type of entity issuing the contract. The guidance in this proposed Update would require an entity to measure its insurance contracts under one of two measurement models, referred to as the building block approach and the premium allocation approach. The proposed Update would improve convergence of U.S. GAAP and IFRSs by moving towards a more globally comparable standard.
- Download the proposed Accounting Standards Update
- Read the press release introducing the proposed Update
- Read the FASB in Focus—General Overview
- Read the FASB in Focus—Scope Overview
- View the FASB podcast
- Download the slides used in the podcast
- Read the Comment Letters on the FASB proposed Update
- Read the Comment Letter and Other Feedback Summary
- Read the User Outreach Feedback Summary.
Discussion Paper, Preliminary Views on Insurance Contracts (September 17, 2010)
On September 17, 2010, the FASB issued, for public comment, a Discussion Paper, Preliminary Views on Insurance Contracts. The comment period for the IASB Exposure Draft ended on November 30, 2010. The comment period for the Discussion Paper ended on December 15, 2010.
- Download the FASB Discussion Paper.
- Read the Comment Letters on the FASB Discussion Paper
- Read the press release introducing the FASB Discussion Paper.
- Download the IASB Exposure Draft.
- Read the Comment Letters on the IASB Exposure Draft.
- Read a summary of User Outreach.
- Thursday, December 9, 2010 in Tokyo, Japan
- Thursday, December 16, 2010 in London, United Kingdom
- Monday, December 20, 2010 in Norwalk, Connecticut, USA
Invitation to Comment, An FASB Agenda Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, Including the IASB Discussion Paper, Preliminary Views on Insurance Contracts (August 2, 2007)
On August 2, 2007, the FASB issued an Invitation to Comment, An FASB Agenda Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, Including the IASB Discussion Paper, Preliminary Views on Insurance Contracts. The IASB Discussion Paper (issued May 2007) set forth the IASB’s preliminary views on the main components of an accounting model for an issuer’s rights and obligations (assets and liabilities) under an insurance contract. The comment period for both documents ended November 16, 2007.
- Download the FASB Invitation to Comment.
- Read the Comment Letters on the FASB Invitation to Comment
- Download the IASB Discussion Paper.
- Read the Comment Letters on the IASB Discussion Paper.
*Outreach/Field WorkPublic Roundtable Meetings
The FASB hosted public roundtable meetings on its June 27, 2013 Proposed Accounting Standards Update, Insurance Contracts (Topic 834).
As part of the outreach effort on the June 2013 proposed Update, the Board hosted a series of public roundtables in December 2013.
- December 2nd—FASB office in Norwalk, Connecticut
- 401 Merritt 7
Norwalk, CT 06856
- Session 1: 9:00 a.m. – 12:00 p.m. EST (discussion included topics specific to the Building Block Approach)
- Session 2: 1:00 p.m. – 4:00 p.m. EST (discussion included topics specific to the Premium Allocation Approach)
- 401 Merritt 7
- December 16th—Rosemont, Illinois
- 1:00 p.m. – 5:00 p.m. CST (discussion included scope considerations, topics related to the Building Block Approach and Premium Allocation Approach, and considerations specific to nonpublic and medium-sized entities)
On Tuesday, July 30, the FASB hosted IN FOCUS: The Insurance Contracts Project-Part I, Scope. The webcast featured FASB member Hal Schroeder and FASB staff members discussing the proposal and answering questions submitted by viewers. For more information, click here.
On Thursday, August 1, the FASB hosted IN FOCUS: The Insurance Contracts Project-Part II, The Models. The webcast featured FASB members Tom Linsmeier and Marc Siegel, as well as FASB staff members discussing the proposal and answering questions submitted by viewers. For more information, click here.
*BOARD/OTHER PUBLIC MEETING DATES
The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
|*February 19, 2014||Board Meeting—Scope and project direction|
|*January 22, 2014||Joint Board Meeting—Feedback summaries|
|May 23, 2013||Board Meeting—Cost-benefit analysis and consideration of complexity, authorization to ballot|
|March 6, 2013||Board Meeting—Treatment of changes in estimated interest crediting and accretion rates, election of the fair value option, other miscellaneous issues|
|February 27, 2013||Board Meeting—Presentation, Disclosure|
|February 20, 2013||Board Meeting—Segregated assets related to direct performance linked insurance contracts, accretion of interest on the margin|
|February 13, 2013||Board Meeting—Reconsideration of the measurement of investment components and the aggregate insurance contracts revenue, transition, effective date and comparative financial statements, early adoption, and comment period|
|February 6, 2013||Board Meeting—Accounting for guarantees, Modifications of insurance contracts, Foreign currency transactions|
|January 30, 2013||Joint Board Meeting—Allocation of insurance contract revenue—change in pattern of expected claims, Considering the transition proposals in the light of subsequent decisions on insurance contracts revenue|
|November 20, 2012||Joint Board Meeting—Discount Rate - Components of Contracts Cash Flows to Which Mirroring Does Not Apply but That Are Affected by Expected Asset Returns|
|November 20, 2012||Board Meeting—Scope - Guarantee Contracts|
|November 14, 2012||Board Meeting—Ceding Commissions, Business Combinations and Portfolio Transfers, Participation Features of Mutual Insurance Companies|
|October 17, 2012||Joint Board Meeting—Presentation in statement of comprehensive income comparison of methods, non-claims fulfillment costs, and acquisition costs|
|October 15, 2012||Joint Board Meeting—Premium allocation approach discount rate follow up, and participating contracts|
|October 15, 2012||Board Meeting—Re-designation of financial assets|
|October 3, 2012||Board Meeting—Measurement of the Aggregate Premium for the Insurance Component|
|September 24, 2012||Joint Board Meeting—Acquisition Costs in the Pre-coverage Period, Transition Requirements|
|September 5, 2012||Board Meeting—Unlocking of the Single Margin|
|August 1, 2012||Board Meeting—Charitable Gift Annuities|
|July 25, 2012||Board Meeting—Title Insurance Contracts, Advertising Costs: Direct Response Advertising|
|June 12, 2012||Joint Board Meeting—Earned Premiums, Unbundling: Allocation of Cash Flows|
|May 22-24, 2012||Joint Board Meeting—Acquisition Costs, Separation of Investment Components from the Insurance Contract, Summary of Separation Approaches, The Use of OCI|
|April 18, 2012||Joint Board Meeting—Reinsurance, Contract Modifications, Riders and Policy Loans|
|March 21, 2012||Joint Board Meeting—Unit of Account, Separation of Investment Components from the Insurance Contract|
|March 7, 2012||Board Meeting—Financial Instruments with Discretionary Participation Features|
|February 27, 2012||Joint Board Meeting—Eligibility Criteria for the Premium Allocation Approach, Mechanics for the Premium Allocation Approach, Measurement of Liabilities for Infrequent, High-Severity Events, Onerous Contracts, Unbundling Goods and Services Components, Financial Instruments with Discretionary Participation Features (IASB only)|
|December 15-16, 2011||Joint Board Meeting—Participating Contracts, Discounting of the Liability for Incurred Claims, Unit of Account, Onerous Contracts|
|November 30, 2011||Board Meeting—Accounting for Participation Features|
|November 16, 2011||Joint Board Meeting—Disaggregation of Explicit Account Balances|
|October 20, 2011||Joint Board Meeting—Fixed-Fee Service Contracts, Premium Allocation Approach, Statement of Financial Position, Statement of Comprehensive Income|
|September 19, 2011||Joint Board Meeting—Risk Adjustment and Disclosures|
|September 7, 2011||Board Meeting—Single Margin and Liability for Incurred Claims|
|July 21, 2011||Joint Board Meeting—Premium Allocation Approach|
|June 15, 2011||Joint Board Meeting—Statement of Comprehensive Income|
|June 13, 2011||Joint Board Meeting—Residual Margin and Acquisition Costs|
|May 31, 2011||Joint Board Meeting—Reinsurance|
|May 17-18, 2011||Joint Board Meeting—Risk Adjustment|
|May 11, 2011||Joint Board Meeting—Policyholder Participation|
|May 4, 2011||Joint Board Meeting—Unbundling|
|April 27, 2011||Joint Board Meeting—Modified Approach|
|April 12, 2011||Joint Board Meeting—Discount Rate|
|March 29, 2011||Joint Board Meeting—Unlocking the Margin and the Insurance Working Group Meeting|
|March 22, 2011||Joint Board Meeting—Risk Adjustment and Contract Boundary|
|March 21, 2011||Joint Board Meeting—Risk Adjustment, Discount Rate, and Unbundling|
|March 15, 2011||Joint Board Meeting—Risk Adjustment, Discount Rate, Initial Recognition, and Definition|
|March 14, 2011||Joint Board Meeting—Presentation, Composite Margin, and Discount Rate|
|March 2, 2011||Joint Board Meeting—Scope, Field Tests, Uncertainty, and Acquisition Costs|
|March 1, 2011||Joint Board Meeting—Discounting and Scope|
|February 18, 2011||Joint Board Meeting—Discount Rate, Cash Flows, Risk Adjustment, Recognition, Residual or Composite Margin, and Presentation|
|February 17, 2011||Joint Board Meeting—Project Axioms and Assumptions, and Discount Rate|
|February 16, 2011||Joint Board Meeting—Unbundling|
|February 9, 2011||Board Meeting—Changes to U.S. GAAP|
|February 3, 2011||Board Meeting—Discount Rate|
|February 2, 2011||Joint Board Meeting—Acquisition Costs|
|January 19, 2011||Joint Board Meeting—Discount Rate|
|January 18, 2011||Joint Board Meeting—Comment Letter Summaries|
|December 15, 2010||Joint Board Meeting—Project Review and Outreach Summary|
|July 28, 2010||Board Meeting—Modified Approach|
|July 19, 2010||Joint Board Meeting—Unbundling, Unit-Linked Contracts, Modified Approach, and Investment Contracts with Discretionary Participating Features|
|June 23, 2010||Joint Board Meeting—Cash flows, Acquisition Costs, Participating Contracts, Unbundling, Presentation, Residual or Composite Margin|
|June 15 & 16, 2010||Joint Board Meeting—Cash Flows, Foreign Currency, Risk Adjustment, Reinsurance, Acquisition Costs, Residual or Composite Margin, Participating Contracts, Insurance Risk, Embedded Derivatives, Derecognition, Portfolio Transfers|
|June 10, 2010||Joint Board Meeting—Participating Contracts and Risk Adjustment|
|June 9, 2010||Board Meeting—Modified Approach|
|June 1, 2010||Joint Board Meeting—Transition, Portfolio Transfers, and Business Combinations|
|May 19, 2010||Joint Board Meeting—Unbundling and Scope|
|May 18, 2010||Joint Board Meeting—Residual Margin, Risk Adjustment, Composite Margin, Unit of Account, and Disclosures|
|May 5, 2010||Board Meeting—Contract Boundaries|
|April 22, 2010||Joint Board Meeting—Discount Rate|
|April 14, 2010||Board Meeting—Use of Other Comprehensive Income|
|March 24, 2010||Joint Board Meeting—Disclosures|
|March 23, 2010||Joint Board Meeting—Risk Adjustment and Participating Contracts|
|March 22, 2010||Joint Board Meeting—Definition and Scope|
|March 17, 2010||Joint Board Meeting—Risk Adjustment|
|March 16, 2010||Joint Board Meeting—Acquisition Costs|
|March 15, 2010||Joint Board Meeting—Residual Margin|
|February 10, 2010||Joint Board Meeting—Reinsurance and Policyholder Accounting|
|January 27, 2010||Board Meeting—Policyholder Behavior and Deposit Floor|
|January 19, 2010||Joint Board Meeting—Measurement Approach, Risk Adjustment, Recognition, Residual Margin, and Policyholder Behavior|
|January 5, 2010||Joint Board Meeting—Unbundling, Presentation, and Embedded Derivatives|
|December 16, 2009||Joint Board Meeting—Measurement Approach and Risk Adjustment|
|November 24, 2009||Board Meeting—Recognition, Embedded Options, and Derecognition|
|November 18, 2009||Joint Board Meeting—Participating Contracts|
|October 28, 2009||Joint Board Meeting—Scope, Measurement Approach, Acquisition Costs, and Presentation|
|July 23, 2009||Joint Board Meeting—Fulfillment Value and Acquisition Costs|
|July 21, 2009||Board Meeting—Risk Adjustment, Measurement Approach, and Discounting|
|May 18, 2009||Board Meeting—Risk Adjustment and Acquisition Costs|
|April 2, 2009||Board Meeting—Cash Flows|
|February 25, 2009||Board Meeting—Measurement Approach for Insurance Contracts|
|October 29, 2008||Agenda decision announcement|
*BACKGROUND INFORMATIONIn 2002, the IASB decided to address accounting for insurance contracts in a two-phase project. The first phase of the project was completed in May 2004 with the issuance of International Financial Reporting Standard (IFRS) 4, Insurance Contracts, which provided temporary guidance for insurers adopting IFRSs in 2005. IFRS 4 made limited improvements to accounting practices for insurance contracts, permitted a wide variety of practices to continue, and avoided major changes that might be reversed upon completion of the second phase.
As part of the second phase of the project, in May 2007, the IASB issued a Discussion Paper, Preliminary Views on Insurance Contracts, which focused on developing a comprehensive accounting model for an insurer’s rights and obligations (insurance assets and liabilities) arising from insurance activities.
In August 2007, the Board issued an Invitation to Comment, An FASB Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, which included the IASB’s Discussion Paper. The Boards’ objective in undertaking the proposed project was to develop a common, high-quality standard that addresses recognition, measurement, presentation, and disclosure requirements for insurance contracts. The Board received 45 comment letters in response to the Invitation to Comment, which led to its decision in October 2008 to participate in the project jointly with the IASB. Since then, the Boards have held more than 20 meetings to discuss various proposals to develop a common standard for insurance contracts. Although the project on insurance contracts is a joint project, it is not part of the Boards’ Memorandum of Understanding that was issued to acknowledge their commitment to the development of high-quality, compatible accounting standards and further the convergence of U.S. GAAP and IFRSs.
The IASB published an Exposure Draft on financial reporting for insurance contracts on July 30, 2010, which, when finalized, will replace IFRS 4. In developing the IASB’s Exposure Draft, most of the discussions about the proposed insurance accounting approaches were held jointly with the FASB. While the Boards reached common decisions in many areas, they reached different conclusions in others. Some Board members prefer the IASB’s proposed approach; however, the majority prefers an alternative approach. Regardless of Board members’ individual views and uniform commitment to convergence, the Board determined that additional information was needed about whether the possible new accounting guidance would represent a sufficient improvement to U.S. GAAP to justify issuing new guidance. On September 17, 2010, the Board issued, for public comment, a Discussion Paper, Preliminary Views on Insurance Contracts.
The Boards jointly deliberated topics from the FASB discussion paper and IASB exposure draft. On June 27, 2013, the FASB issued proposed Accounting Standards Update, Insurance Contracts (Topic 834) for public comment. In light of the feedback received on the 2013 proposed Update, the Board decided to limit the scope to insurance entities as described in existing U.S. GAAP and that the project should focus on making targeted improvements to existing U.S. GAAP. For short-duration contracts, the Board decided to limit the targeted improvements to enhancing disclosures.
For long-duration contracts, the Board concluded that decisions reached by the IASB in its 2013 IASB Exposure Draft, Insurance Contracts, should be considered when contemplating improvements to existing U.S. GAAP.
For current information about the FASB’s insurance project focusing on targeted improvements to insurance accounting, visit the current FASB Insurance Project page.
For additional and current information about the IASB’s insurance contracts project visit the IASB Insurance Contracts Project page.
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