New accounting standard will significantly impact the insurance industry, says ACCA
ACCA (the Association of Chartered Certified Accountants) comments on IFRS 17 – the new insurance contracts standard – issued today by the International Accounting Standards Board (IASB).
“Existing insurance accounting treatments around the world are very variable and none are the same as IFRS17. They will by 2021 be replaced by a consistent treatment in all countries using global standards. The scope of this standard is limited because it applies only to the relatively restricted number of insurance companies, but they do form a very significant sector in the economy. But for those companies the impact will be very significant – both in terms of the changed accounting numbers that they will report and in terms of the data that may need to be assembled. Investors and other users of those financial statements will also have to adapt to the new numbers.
“Despite the long development period not all parties may be content with all aspects of the new standard. Though we think that all should recognise that consistent accounting treatments will be a major advance, and the imperfections perceived by some are an inevitable price that has to be paid.
“ACCA hopes that the endorsement of IFRS17 in the European Union and in other jurisdictions can now proceed swiftly to allow companies in particular the certainty and time to plan and then progress their transition to the new system. National standard setters such as the FRC in the UK will have to consider adapting their standards in the direction of IFRS17 where there are insurance companies that do not report under IFRS,” said Richard Martin, head of corporate reporting at ACCA.