Group of North American Insurance Enterprises (GNAIE) along with four other insurance industry trade associations based in North and South America, has urged the International Accounting Standards Board (IASB) to reconsider its decision to apply a single measurement model to both life and non-life insurance contracts and instead utilize the existing global accounting standard for non-life contracts.
In a June 1 letter sent to both the IASB and the Financial Accounting Standards Board (FASB), the associations said: We are concerned with the potential loss of decision useful information that would accompany the migration to a single model for life and non-life insurance contracts. We are equally concerned that the proposed single model is neither supported by established actuarial practice nor validated by empirical evidence, but is based instead largely on theoretical hypotheses.
The insurance industry associations further stressed that: Given the size, scope, and importance of the global non-life insurance market, we consider the Boards’ current direction risky and ask that they reconsider their proposals affecting the accounting and reporting for non-life insurance before completing, voting on, and publishing their respective Exposure Drafts for insurance contracts.
The associations called on the IASB to use the existing global accounting standard for non-life insurance contracts with a coverage period of one year or less with the inclusion of several attributes.
The letter was signed by the American Insurance Association, Asociacion de Aseguradores de Chile, GNAIE, National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America.