Insurance companies from across the globe have urged the London-based independent, accounting standard-setting body International Accounting Standards Board (IASB) to amend the accounting rules.
These are the rules which seek to increase visibility of their earnings, Reuters has reported.
Nine national and regional insurance industry associations from Canada, Korea, Europe, New Zealand, Australia and South Africa have also requested IASB to extend the deadline of implementation of its “IFRS 17” book-keeping rule by two years to January 2023.
The rules, which were developed over 20 years, aim to enable investors to compare how much insurance firms earn from policies. It achieves this by prising open a “black box” of opaque national practices, according to the publication.
IASB rules are accepted in more than 100 countries, however, the US, being an exception, has its own accounting standards.
In a letter to the IASB, the representative organisations of the insurers stated that preliminary work has highlighted that numerous important issues required to be settled to make the new rule practical.
Reuters quoted a letter to IASB chair Hans Hoogervorst as saying that: “As a result, we strongly believe a two-year delay in the effective date of the standard is required.
“There is no expectation that a delay will result in insurers stopping or slowing their implementation project.”
Additionally, the CFO Forum of chief financial officers from major European insurers such as Aviva, Generali, Allianz, and Axa have claimed the new rule is causing conflicting reporting, and requirements that are needlessly difficult.
The implementation is expected to cost €50m to €320m per CFO Forum member, and the ongoing operational expenses are likely to be considerably higher compared to existing insurance book-keeping rules.
The IASB board is expected to discuss staff reports regarding a possible extension and amendments next week, however, no decision is expected at that time.