The Research On Accounting Standard Of Insurance Contracts

With the continuous development of the world economy and the deepening of globalization,the risks and uncertainties are receiving more and more attention.Therefore,the insurance industry that manages risks has been greatly developed.However,due to the diversity of the insurance business and the inconsistency of the accounting standards of insurance contracts,the accounting treatment of insurance contracts in various countries varies widely,resulting in the lack of comparability of the financial data of insurance companies.In order to unify the accounting treatment of insurance business in various countries,the IASB has finally released IFRS 17 on May 18 th,2017 after years of researching,and it will come into effect on January 1st,2021.Recently,the current accounting standard of insurance contracts in China are under the pressure of multiple changes.From an external perspective,China's accounting standards have been committed to maintaining convergence with international accounting standards.Therefore,China is bound to start the study of IFRS17,and IFRS17 will be a basis for the further revision.From the internal point of view,with the development of China's insurance industry and insurance products,its current accounting standard of insurance contracts has some boundedness.Therefore,China should review the current accounting standard of insurance contracts.This paper reviews the evolution of international and Chinese insurance contracts accounting standard,compares the differences between IFRS17 and the current Chinese standard,and analyzes the theories of China's insurance contracts accounting standard from three aspects: accounting confirmation,accounting measurement,and accounting information disclosure.After analyzing the status quo of China's insurance contracts accounting treatment,this paper explores the deficiencies in China's current accounting standards,and put forward targeted reform proposals,hoping to contribute to the development and improvement of China's accounting standard of insurance contracts.The main conclusions of the paper are as follows: Firstly,there are some problems in the accounting treatment of China's insurance contracts,such as the unclear division of the insurance contract measurement unit,the non-standard measurement methods of margins,and the incomplete disclosure of insurance contract accounting information.The main causes of these problems are the complexity of the insurance contract itself and the imperfections of China's standards.Secondly,in the accounting confirmation of insurance contracts,relevant regulations for the selection of insurance contract measurement units should be perfected,enterprises should give priority to selecting a contract group that has the homogenous insurance risk as a measurement unit.Besides,the criteria for grouping insurance contracts should be clarified,a group of insurance contracts should have similar expected profitability,and for which the amount and timing of cash flows are expected to respond in similar ways to key drivers of risk.Thirdly,in the accounting measurement of insurance contracts,the standard should set the current performance value model as the measurement model of insurance contracts.Besides,the contract boundary of insurance contracts should be defined,and only the cash flow within the boundary belongs to the measurement range of insurance contract.What's more,the definition and connotation of margins should be provided.Specifically,the risk margin reflects the compensation required by the company for bearing the risks in fulfilling obligations,its measurement should adopt a principle-based approach.The residual margin reflects the unrealized profits of insurance contracts,and enterprises should update the measurement of the residual margin for changes in estimates of the fulfilment cash flows relating to future service,and on the basis of coverage unit,the residual margin will be allocated in profit or loss over the coverage.Fourthly,in the disclosure of accounting information on insurance contracts,enterprises should be required to disclose the selection and grouping criteria of the measurement units of insurance contracts,the measurement methods and changes of margins,and the profit of insurance contracts.