Pushing the boundaries

Kevin Griffith, senior manager in Ernst & Young’s Financial Services GAAP Advisory, examines the issues at the heart of the IASB’s new insurance discussion paper and finds that the initial proposals will more than likely stir up opposition from the insurance industry

In many respects the insurance project is pushing the boundaries of current international accounting practice. The IASB has issued a discussion paper which calls for insurance contract liabilities to be measured at something that is very close to an estimated fair value. This raises a number of issues in an industry where, due to the lack of a liquid and active secondary market, a number of significant variables have to be estimated. It is therefore likely that the discussion paper will generate a large amount of interest and comment. It is also likely that much of this comment will be unsupportive of certain aspects of the proposed model.