The Boards reviewed how insurers should budget for cash-flows, both inflows and outflows, amongst elements that are unbundled (i.e., split from the insurance contract liability and calculated independently under a different standard).
In their May possibly assembly, the Boards decided on the criteria for finding out when certain parts, which include those for investments and non-insurance services and goods, need to be unbundled with the insurance contract. The team members encouraged that insurers must follow a 3 step way to set aside cash fl ows amongst unbundled components:
(1) The remaining factors, supplements or discounts must be assigned to insurance parts and/or services and goods similar to the revenue recognition ED
(2) Cash fl ows need to be assigned to the investment component on a stand-alone basis (3) Any outflows associated with more than one unbundled aspect should be assigned on a rational and consistent basis and measured in a manner that is like accounting for that component.
(2) Cash fl ows need to be assigned to the investment component on a stand-alone basis (3) Any outflows associated with more than one unbundled aspect should be assigned on a rational and consistent basis and measured in a manner that is like accounting for that component.
