IASB includes liquidity premium in new insurance accounting proposals

Laurie Carver
02 Aug 2010

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The International Accounting Standards Board (IASB) has included a liquidity premium in new proposals for insurance company accounting standards which retreat from the more market consistent exit value-based approach – in which asset and liability values reflect the cash required to liquidate them – outlined in its last draft in 2007.

The controversial premium would be added to the discount rate for liabilities, thereby decreasing their value – its inclusion in the Solvency II directive caused

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