Newsletter Mar 2008: Insurance contracts face thorny fair value problem

Global accounting rule-makers, responding to insurance industry opposition to their preliminary ideas on applying fair value to insurance contracts, are looking at so-called settlement value as an alternative approach to solving one of thorniest problems in accounting. The problem stems from the lack of a liquid secondary market in insurance policies, which form the bulk of insurance company liabilities, on which to base a current-value measurement of the policies, say insiders.