International accounting standards boards have agreed to separate explicit account balances from insurance contract liability.

At its latest meeting in London, the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) defined what balances could be excluded from a contract.

These include balances that are the accumulation of the monetary amount of transactions between the policyholder and the insurer.

All FASB members supported the proposal, but IASB members wanted to measure these balances as part of the insurance contract and to exclude them for presentation or disclosure.

IASB members also called for a way to exclude some other deposit components of a contract.

This will now be a topic at a future joint meeting of the boards where there will be discussions on how additional account balances could be separated from the contracts.

Also on the agenda for future meetings are how income and expense items related to the explicit account balances should be recognised in the statement of comprehensive income and whether to measure separated account balances.

But the boards will have to decide first if this topic is actually outside the proposed insurance contract standards.

The next joint meeting of the two boards will be held next month and a meeting of the working group on insurance contracts will now be held in March.