The National Association of Mutual Insurance Companies submitted a comment letter Oct. 17 to the Financial Accounting Standard Boards opposing the adoption of the FASB’s Insurance Contracts Exposure draft that proposes the replacement of the entire U.S. GAAP standard for insurance accounting. NAMIC strongly suggested that the U.S. GAAP standards remain in place.
The FASB Insurance Contracts proposal would require significant accounting changes for insurance companies and would change how insurers conduct their business.
“While NAMIC supports the efforts of the FASB and IASB to develop consistent global accounting rules for insurance, we believe the best way to do that is by using the current U.S. GAAP standards,” said Michelle Rogers, NAMIC’s director of financial and regulatory policy.
NAMIC’s comment letter discusses all the details and problems with the FASB proposal, and Rogers highlighted some of the key issues. “Our members are very concerned about the proposed changes in reserving practices, including the requirement to discount reserves,” she said. “Reserves are there to assure companies can pay claims to customers when they are owed.”
For smaller insurance companies these accounting changes will add significant expense at a time when state regulators have required them to submit new enterprise risk reports, pay for new risk-focused examinations, comply with enhanced RBC requirements, and potentially file new corporate governance reporting.
“At some point small companies will not be able to bear the burdens of all the increased requirements,” Rogers said. “This will not benefit the people they insure or the industry.”
Director of Public Affairs, State & Policy Affairs
Posted: Friday, October 18, 2013 8:30:31 AM. Modified: Friday, January 31, 2014 10:13:10 AM.
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