North American Insurers Support Recommendations of NAIC Task Force on Accounting Standards

NEW YORK, May 14 /PRNewswire-USNewswire/ -- North American insurance and reinsurance companies support recommendations of an actuarial task force of the National Association of Insurance Commissioners (NAIC), including the two-model approach to accounting standards, and applauded it for countering many of the "ill-conceived conclusions" of the International Accounting Standards Board (IASB).

The NAIC's Casualty Actuarial and Statistical Task Force (CASTF) expressed strong support for the two-model approach separating life from non-life insurance companies and provided other recommendations in its May 14 report to the NAIC's Solvency Modernization Task Force and International Accounting Standards Working Group.  

"The Group of North American Insurance Enterprises (GNAIE) strongly endorses the two-model approach and other recommendations of the Task Force and applauds it for expressing its concerns with the ill-conceived set of conclusions reached by the International Accounting Standards Board," said Kevin Spataro, chairman of GNAIE's Accounting Convergence Committee.  

The Task Force was asked to provide input for the NAIC's tentative positions for communication to the International Association of Insurance Supervisors and the (IASB).

Spataro also said, "GNAIE strongly agrees with the Task Force's opposition to the use of probability-weighted average of future cash-flows."

GNAIE and the Task Force believe that expected settlement value or fulfillment value is more useful and understandable, and produces reserve results whose accuracy can be more readily compared to earlier reserve estimates made by the insurer.

GNAIE also endorses the Task Force recommendation on the insurers' use of an unearned premium reserve methodology for measuring reserves prior to providing risk protection services during the coverage period.

In addition, prohibiting the discounting of property/casualty reserves unless payments are fixed and determinable is supported by GNAIE and the Task Force, said Spataro.  

"GNAIE is hopeful that the sound recommendations of the Task Force, which are consistent with the real world operations of insurers and reinsurers, will help shape the NAIC's positions with the international standards setters," Spataro said.

The goal of GNAIE is to influence 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