As work on converging international accounting standards continues, the Group of North American Insurance Enterprises (GNAIE) is questioning a new measurement approach for insurance contracts recommended by the staff of the London-based International Accounting Standards Board (IASB).
GNAIE, an organization representing life and property/casualty insurance and reinsurance companies, expressed disappointment that the IASB recommendation diverged from the contract fulfillment value (CFV) approach favored by the Norwalk, Conn.-based Financial Accounting Standards Board (FASB).
“The IASB could take a significant step toward convergence of international accounting standards if it is able to reach the same conclusion that the FASB reaches for the measurement approach for insurance contracts,” GNAIE Executive Chairman Jerry de St. Paer said in a September 9 letter to IASB Chair Sir David Tweedie.
GNAIE argues that the CFV approach is superior to the measurement approach that IASB recommends, deeming it “a largely theoretical concept.”
“GNAIE believes there are fundamental problems with attempting to measure insurance contracts using the pending IAS 37 approach, and those problems cannot be addressed as well in such a measurement approach as they could be in the CFV approach,” de St. Paer wrote.
The IASB will be considering the measurement basis for insurance contracts at its September 18 meeting.
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