The decision by the Financial Accounting Standards Board today to abandon its convergence efforts with the International Accounting Standards Board on insurance contracts represents a major victory for the U.S. insurance industry, according to the National Association of Mutual Insurance Companies. The FASB will instead retain the existing GAAP standards for insurance entities.
Charles Chamness, president and CEO of NAMIC, said FASB made the right decision to keep what he called “the gold standard” of insurance accounting methods. “For the past year, we have forcefully advocated against changes to GAAP accounting for insurance contracts that would deviate significantly from current statutory accounting reporting requirements. GAAP are universally recognized as the gold standard in the world of accounting, and we’re obviously very pleased the FASB came to agree with us.”
Responding to initiatives by the FASB and IASB, NAMIC mounted a multi-faceted campaign to thwart the imposition of the new international requirements on U.S. GAAP. NAMIC engaged member companies to submit letters to both the FASB and IASB. More than 70 comment letters were filed, which unanimously objected to any shift away from the existing requirements.
NAMIC worked closely with staff at the National Association of Insurance Commissioners during its analysis of the IASB and FASB exposure drafts. In addition, it communicated concerns to the Federal Insurance Office and other federal agencies. NAMIC staff also participated in a FASB-sponsored roundtable discussion on the issue in December.
NAMIC is the largest property/casualty insurance trade association in the country, serving regional and local mutual insurance companies as well as many of the country’s largest national insurers. Its 1,400 member companies write more than $196 billion in annual premiums and serve more than 135 million auto, home and business policyholders.
Director, Federal Public Affairs