FRC PROPOSES UPDATES TO UK GAAP FOR INSURANCE
Source: Financial Reporting Council Press Release, 29 July 2013 THE FRC has issued a draft new UK accounting standard for insurance (FRED 49: Draft FRS 103 Insurance Contracts). The proposals rationalise existing UK accounting provisions for insurance rather than establishing new requirements. They build on the current global standard while enabling UK insurance accounting practices to be retained. Draft FRS 103 follows on from the 2012 Discussion Paper ‘Insurance Accounting - Mind the UK GAAP’ and applies to those entities applying FRS 102 that have insurance contracts; life and general insurers including mutuals and non- listed subsidiaries of listed entities. The draft Implementation Guidance accompanying draft FRS 103 is drawn from the existing FRS 27 Life Assurance and the ABI’s Statement of Recommended Practice. The FRC expects little change in accounting by entities within their scope. Other entities which are not regulated insurance businesses but which have contracts meeting the definition of insurance will need to apply certain aspects of draft FRS 103. The FRC is issuing the draft so that it can be finalised in time for the wider mandatory implementation of UK GAAP by 1 January 2015. The FRC stresses that these developments are distinct from the IASB’s current proposals on insurance contract accounting. The FRC will only consider international developments and their potential adoption in UK GAAP when there is much more certainty about the outcome of the IASB’s work.