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Deloitte: More insurers calling for a single global accounting framework
July 16, 2012
By Rob Starr, Content Manager, Big4.com
A new survey of insurance finance executives conducted on behalf of Deloitte, the business advisory firm, by the Economist Intelligence Unit (EIU) says a need for increased financial reporting transparency and consistency has led to more insurers calling for a single global accounting framework. In fact, 47% of respondents said they want the United States to abandon its national accounting standards in favour of International Financial Reporting Standards (IFRS). However, a complete set of IFRS rules for insurance liabilities does not exist yet and US Generally Accepted Accounting Principles (US GAAP) on the same subject has been earmarked for a radical reform since 2008.
Given the potential consequences these rules will have on insurance companies, more than half of respondents rated the uncertainty around the timeframe for implementation of the new IFRS for insurance contracts (IFRS 4 Phase II) (51%) and for financial instruments (IFRS 9) (52%) as their biggest concern. However, many insurers are stuck in a ‘wait and see’ mode, with 56% saying they will wait until the standards are final before starting their projects to implement the new rules.
The survey was conducted by the Economist Intelligence Unit on behalf of Deloitte. Over 200 senior executives at insurance companies from across the globe were asked about their views on the impact of the likely accounting changes on their business and what – if anything – they were doing to prepare. One-half of the survey respondents who rate the insurance contracts as ‘high-impact’, in terms of the implications for their business, have not conducted a business impact assessment, while nearly one-quarter (24%) of the largest companies have not allocated a budget to the transition.