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(Reuters) — An international standard setting body has proposed a one-year delay and changes to the first global accounting rule for insurance contracts following industry calls for a cut in compliance costs and more time.
The International Accounting Standards Board published its IFRS17 standard in May 2017 to replace a patchwork of national rules but met opposition from insurers, which said it would be costly to implement in too short a time.
The IASB formally proposed a one-year delay to 2022 on Wednesday, along with changes it said would reduce compliance costs for a standard that took 20 years to formulate.
“The proposed amendments are designed to minimize the risk of disruption to implementation already underway,” the IASB said in a statement. “They do not change the fundamental principles of the standard or reduce the usefulness of information for investors.”
The amendments would mean excluding some banking products from the scope of the standard, and requiring companies to present insurance contract assets and liabilities in a less detailed way.
Olav Jones, deputy director general of Insurance Europe, an industry body, said insurers’ extensive testing, which was coordinated by the European Union’s advisory body on accounting, highlighted important issues with the standard and the need for a two-year delay.
“While some helpful improvements have been suggested in the IASB’s consultation, a number of important issues remain unaddressed,” Mr. Jones said.
Francesco Nagari, global insurance leader at consultants Deloitte Touche Tohmatsu Ltd., said the proposed changes could address issues raised by the insurance sector.
The IASB, whose accounting rules are used in more than 140 countries, but not the United States, put its proposed changes out to public consultation.
Efforts to forge common, international accounting standards for insurance are taking longer than expected but will ultimately yield benefits for the industry, Swiss Re Ltd. concludes in its latest sigma study, released Wednesday.