New rules set to shake up the global insurance industry
IFRS17 regulations a ‘once in a lifetime’ change that will boost transparency, helping investors and policy holders
New “once in a lifetime” rules standardising the way insurers around the world report their accounts may help them to raise capital from the markets as well as benefitting consumers and investors, according to analysts.
The regulations, called IFRS17, are due to come into force in 2021 and aim to provide greater clarity to investors and analysts, as well as those who have purchased insurance policies.
They were published on Thursday by the International Accounting Standards Board (IASB) and will apply to the 150 jurisdictions around the world that are signed up to the IFRS (International Financial Reporting Standards).
Insurance accounting will never have been so revealing
“Every insurer is certain to see an impact on its reported numbers in one way or another. Insurance accounting will never have been so revealing,” said Joachim Kölschbach, KPMG’s global IFRS insurance leader in a statement.
“Investors and analysts will be eagerly awaiting the new figures as they begin to emerge in 2021.”
IFRS 17 rules require all insurers covered by the regulations to produce their accounts in the same way, unlike before where each would follow the rules provided by individual regulators.
At present these can vary significantly. “We know of one company that reports under two standards. Under one it makes a profit, and under the other it makes a loss. That shows how widely divergent they can be,” IASB chairman Hans Hoogervorst said in an introductory statement on the organisation's website.