^aKPMG Deutsche Treuhandgesellschaft, Barbarossaplatz 1a, 50674 Cologne, Germany. E-mail: sengelaender@kpmg.com and jkoelschbach@kpmg.com

Abstract

In 1997, the IASC (predecessor of today's International Accounting Standards Board – IASB) started a project on accounting for insurance contracts. At the end of 2001 and beginning of 2002, it published a Draft Statement of Principles (DSOP) for an International Financial Reporting Standard Insurance Contracts. This proposal was based on a fair value accounting on assets and liabilities arising from insurance contracts. Whereas a fair value is relatively easily applicable for financial instruments that are traded at active markets, the key problem for the measurement of insurance contracts is that there do not exist active markets. The proposal for a full fair value accounting for insurance entities did therefore not find a broad acceptance in the insurance industry.¹ The IASB has now re-started the discussion of an International Financial Reporting Standard Insurance Contracts replacing the interim solution of IFRS 4.