Research for the IFRS 4 Phase II Issues on Measurement and Presentation of Insurance Liability

Before SFAS No.40 set, the accounting standards of insurance contracts in Taiwan are regulated and framed by governmental institutions in reference to practical accounting treatments and related codes and regulations. Since, these standards originally were regulations from the U.S.A., the standards are close to statutory accounting principle which the foundation of information being expressed may differ from general acknowledged purposes.
The process of setting up the accounting principle of insurance contracts is divided into two stages by International Accounting Standard Committee (IASC). First, the boundary of insurance contracts was defined and temporary accounting treatment standards were provided in 2005. Second, the complete norm and assessment standards of insurance contracts were released for discussions in May of 2007. The exposure draft was proposed by International Accounting Standard Board (IASB) on July, 30, 2010.
The paper discusses measurement of insurance liabilities proposed by exposure draft and analysis total 249 comment letters about the respond of measurement of insurance liabilities. Current SFAS No.40 is equivalent to IFRS 4 phase I and Taiwan are going to fully adopt IFRS in 2013. Therefore, the paper also discusses the effect of IFRS 4 phase II on Taiwan’s insurance industry and provides some suggestion. This paper could provide preparers of financial statements a better background knowledge and provide references for insurance accounting researchers.