FRC PRO­POSES UP­DATES TO UK GAAP FOR INSURANCE

Insurance - - INDUSTRY UPDATES -

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.

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