GNAIE Applauds Direction of FASB on Short-Term Insurance Contracts

NEW YORK, June 22 /PRNewswire-USNewswire/ -- The Group of North American Insurers (GNAIE) commended the Financial Accounting Standards Board (FASB) for moving toward a model for calculating claims reserves for property/casualty insurance companies that reflects the ultimate amount expected to be paid to fulfill contractual obligations to policyholders as they come due.

Jerry de St. Paer, executive chairman of the Group of North American Insurance Enterprises (GNAIE), expressed support for FASB's direction of measuring short-term property/casualty insurance contracts using a non-discounted, ultimate contractual fulfillment model with no risk margins that reflects the ultimate amount expected to be paid.

"GNAIE is pleased that the FASB is considering moving toward an ultimate contractual fulfillment value model for short duration insurance contracts that is consistent with insurers business model, fully transparent, reflects amounts expected to be paid to policyholders, and provides the most decision-useful information to investors and insurance regulators charged with regulating the solvency of insurers," he said.

De St. Paer stressed that the introduction of discounting and risk margins to the existing measurement model would unnecessarily complicate what is now a reliable, fully transparent, comparable, and understandable measurement model widely accepted by property/casualty insurance companies around the world.

To work with international standard setters in the development of international accounting and solvency standards to ensure that they result in robust, high quality standards for insurance enterprises.

He further pointed out that "Suggested alternatives to an ultimate contractual fulfillment value model are untested in the real world of insurance, could obfuscate real results and ultimately not produce the decision-useful information sought by users of financial statements."

The goal of GNAIE is to work with international accounting standards to ensure that they result in high quality accounting and solvency standards for insurance companies and, to that end, to increase communications between insurers doing business in North America and international regulators and standard setters.  GNAIE works to meet its goals through modeling of proposed accounting standards, analysis, comment and coordination with various end users of financial reports.

SOURCE Group of North American Insurance Enterprises