o Current market discount rates that adjust the estimated future cash flows for the time value of money.

o An explicit and unbiased estimate of the margin that market participants require for bearing risk (a risk margin) and for providing other services, if any (a service margin).

Among the benefits that IASB said it believes will be accrued are:

o Consistency with other International Financial Reporting Standards (IFRSs) that require current estimates of future cash flows in measuring nonfinancial liabilities and financial liabilities.

o Clearer reporting of economic mismatches between insurance liabilities and related assets, and a reduction in accounting mismatches.

o Consistency with observable current market prices, to the extent they are available. Such prices provide an understandable and credible benchmark for users, even though market prices are not available to support all inputs used in measuring insurance liabilities, according to the IASB.

If FASB adds this to its agenda, then it will be a "revolution for insurance accounting," said Doug Barnert, executive director of the Group of North American Insurance Enterprises, New York. GNAIE has been monitoring proposals that could impact international accounting requirements and impact both insurers' international and domestic accounting.

Fair value impacts accounting measurement, deferred acquisition costs, classification of assets and liabilities as well as treatment of gains and losses, he noted. It is as important to accounting as the NAIC's development of a model investment law was to investments.

He added that when you go to an asset-liability model, then it is important that the profit and loss statement is "realistic and not unnecessarily volatile." Looking at liabilities without also looking at assets will create volatility, Mr. Barnert said.

The IASB draft examines whether insurers should be allowed to show future dividend payments for participating contracts when determining liabilities, he said. Allowing such information to be shown is important because this is information that investors want to know about, Mr. Barnert added.