Lecture on International Accounting Standards for Insurance

Current Standards

• Lack of proper international standard:
  • Current standard: IFRS 4
  • Serves as a stopgap measure
  • Allows reporting using national standards
  • Example: One insurance company reports profit under one standard and loss under another, indicating divergence

Issues with Current Standards

• Unsatisfactory situation for investors
• Insurance is crucial for the global economy
  • Companies using IFRS have assets > $13 trillion
• Need for proper investor insight
  • Profit/loss status of companies
  • Exposure to risks
• Importance for financial stability

Introduction of IFRS 17

• First truly international and high-quality standard
• Requires use of updated information
  • Historical information no longer sufficient
  • Provides realistic insight into company performance and risks
• Effective date: 2021
  • 3.5 years preparation time
  • Extensive undertaking for companies

ISB Support for Implementation

• Establishment of a Transition Resource Group
  • Forum for companies and auditors
  • Address and resolve difficulties
• Development of educational material
  • For companies to help them prepare
  • For investors to understand new information

Development and Impact of IFRS 17

• Over 10 years in the making
• Belief in the value of the wait
  • High-quality standard achieved
• Benefits:
  • Better understanding of the insurance industry for investors
  • Positive for the insurance industry itself