property-and-casualty-insurance

Nearly half of all insurers cite a need for financial reporting transparency and consistency, and favour a single global accounting framework, finds a new survey by Deloitte.

This would require the U.S. to abandon its national accounting standards—U.S. Generally Accepted Accounting Principles—and instead adopt International Financial Reporting Standards (IFRS).

Read: What you need to know about IFRS

However, insurers have been waiting since 2008 for a complete set of IFRS rules for insurance liabilities and investments; 56% say they’ll continue to wait before starting projects to implement the new rules.

It seems they will have to wait longer.

The International Accounting Standards Board and the U.S. Financial Accounting Standards Board are still finalizing proposals to substantially re-write accounting standards. But despite significant progress, the boards have struggled to reach an agreement on all issues.

Read: Turning against IFRS

For investors, the new rules will level the playing field, allowing them to compare insurers globally and with other companies in different sectors.

“Today’s insurance reporting is fragmented and it creates a barrier for general investors to consider insurance shares,” says Francesco Nagari, global IFRS insurance leader at Deloitte.

He adds, “This results in a higher cost insurers have to pay when they want to raise capital and the new accounting rules could address this issue.”

Read: IFRS could impact insurance business

Additional findings from the survey include:

  • Virtually no insurers (2%) in the U.S. have started investor engagement programmes;
  • In terms of the implications for their business, one-half of respondents haven’t conducted a business impact assessment, while nearly one-quarter (24%) of the largest companies haven’t allocated a budget to the transition;
  • Executives at two-fifths of insurance companies say their board has no awareness of or involvement in these accounting changes.

Originally published on Advisor.ca
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