In response to the publication of the IASB Exposure Draft on accounting for insurance contracts, Gail Tucker, global accounting services financial instruments leader at PwC, said: the “proposals from the IASB are set to have a significant impact on insurance companies – they fundamentally change the accounting by all entities that issue insurance contracts. Combined with regulatory changes such as Solvency II, adopting this new standard will be a significant challenge for the industry. As a consequence, insurers will need to overhaul their systems and performance reporting.”
“We expect the industry to have mixed views on the revised proposals. The IASB has attempted to address the concerns raised on prior proposals regarding volatility in insurers’ reported results. However, the changes will add significant complexity compared to the previous exposure draft.”
“Nevertheless, insurers should welcome the revised Exposure Draft as a significant step towards achieving a single accounting model, which will enable better global comparability.”
Commenting on how insurers should prepare themselves following the announced changes, David Law, global insurance partner at PwC, said: ”While not all aspects of the Exposure Draft will be welcome it is surely time the industry had a standard for insurance contracts. It will be critical for insurers to work closely with stakeholders to make sure that they understand the impact of the significant changes being proposed. Due to delays in the project many insurers have lost interest, however this could be the last opportunity for the industry to influence the debate before the expected effective date of 2018. Insurers need to act now in assessing the implications of the new proposals on both their contracts and business practices and to assess the additional demands of the proposals on resources, data and modelling systems.”
