Currency of material  
This material was last updated when this standard was released in July 2004.  
 
A list of the omnibus amending standards issued up until July 2007 that have affected this standard since this date is included in the following table. The table also contains the date when the relevant changes become operative. 
 
Omnibus amending standards are available on the AASB website as are compiled standards incorporating omnibus amendments as soon as they are completed by the AASB. 
 
Details of the changes made by each omnibus are summarised in ANT and Charter’s “The Panel” as they are released. For a quick overview of the new material applying at 30 June 2007 click here.  

• The AASB has adopted the requirements of International Financial Reporting Standard (IFRS) 4 across three Standards, namely AASB 4, AASB 1023 “General Insurance Contracts” and AASB 1038 “Life Insurance Contracts”. 
   
  
• Defines an insurance contract as a contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.  
   
  
• Defines insurance risk as risk other than financial risk, where financial risk is defined as the risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, a credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract.  
   
  
• Insurance risk is significant if, and only if, an insured event could cause an insurer to pay significant additional benefits in any scenario, excluding scenarios that lack commercial substance. 
   
  
• A contract that transfers financial risk alone, or only insignificant amounts of insurance risk, is treated under AASB 139 “Financial Instruments: Recognition and Measurement”, to the extent that it gives rise to a financial asset or financial liability. To the extent that it does not give rise to a financial asset or financial liability it is treated under AASB 118 “Revenue”. 
   
  
• Temporary exemptions to an insurer applying AASB 108 “Accounting Policies, Changes in Accounting Estimates and Errors” to insurance contracts that it issues and reinsurance contracts that it holds and to make changes to accounting policies if the changes make the financial report more relevant or reliable. Introduction of certain new practices are prohibited. 
   
  
• Liability adequacy test, where an insurer considers the adequacy of the carrying amount of its insurance liabilities by considering current estimates of future cash flows. If the test shows that the insurance liabilities are inadequate then the entire deficiency is recognised in the income statement. 
   
  
• Disclosures for insurance contracts are required that explain the recognised amounts in its balance sheet and income statement that arise from insurance contracts, and that help users to understand future cash flows from insurance contracts. The insurer determines the appropriate level of aggregation that is required to satisfy the disclosure principles.