Swiss Re’s latest “Sigma” report takes a fresh look at the long-running debate over upgrading and harmonising insurance accounting practices.
And a key conclusion of the study is that accounting reforms currently under consideration can contribute to more meaningful financial reporting in insurance, but probably need to be complemented with additional metrics that clearly and concisely communicate insurers’ underlying economic value to their stakeholders.
According to Swiss Re, accounting standard-setters have been wrestling with how best to improve insurance accounting practices for over a decade.
However, with the US-based Financial Accounting Standards Board (FASB) currently seeking additional industry feedback on its proposals, accounting standards for insurance are now unlikely before 2016.
Swiss Re’s chief economist, Kurt Karl, comments: “The near-term prospect of a single global accounting standard for insurance has dimmed somewhat.
“While the FASB are due to expose their proposals for external review in the first half of next year, they announced in June 2012 that a converged international standard for insurance contracts is unlikely to emerge any time soon.”