A new draft IFRS for insurance policies was published in July 2010 to replace the existing IFRS 4. IFRS 4 contains International Financial Reporting Standards (IFRS) provisions concerned with the accounting for insurance policies. The draft provides for recognition of obligations at their settlement value, which is calculated by discounting the expected future cash flows from the policy. Insurance companies will face major challenges implementing these provisions.
The IASB and the US standard setter, the FASB, have had joint consultations since the beginning of 2011 to deal with the comment letters received. Due to the criticism contained in these letters about the proposals in the draft, the IASB has decided to revise the draft and present it to the public again for comments. This should happen in the first half of 2013. The final standard is expected to be published in the second half of 2014. It is expected that insurance companies will have a preparatory period of three years, which means the standard is likely to come into effect on 1 January 2018.
The Vienna Insurance Group Managing Board is monitoring these developments and will begin preparations to implement the final version of the standard promptly after publication.