2012 IFRS Insurance Global Survey
International and independent analysis of responses from over 200 senior finance executives globally
The proposed changes in International Financial Reporting Standards (IFRS) 4 Phase II, IFRS 9 and the corresponding proposals in the United States are highly complex. Implementing them will require considerable time and expense.
So while the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) continue their deliberations on achieving a single global accounting framework, Deloitte commissioned the Economist Intelligence Unit to survey over 200 insurers operating across the globe to understand their views on the impact of the proposed changes on their business and what they are doing to prepare.
Key findings from the survey include:
- Overwhelming alignment of opinion across borders that insurers want a single global accounting framework.
- Uncertainty around the timetable for implementation is insurers’ biggest concern stemming from the difficulties international and US accounting standard setters have had in meeting their own timetable, and their continuing disagreements on the new rules. This has resulted in most companies adopting a ‘wait and see’ approach, although some insurers are moving early in expectation of the high impact of the new standards on their business.
- Another top concern for insurers is the potential for increased ‘earnings’ and/or capital volatility under the new standard. Executives fear that the transition to the new rules will confuse investors, yet few companies have been talking to investors about this issue (Only 11 per cent of European companies and two per cent of US companies having started an investor engagement program).
- Insurers are concerned that the US will not adopt a consistent standard given the failure of the US Securities and Exchange Commission to be clear about whether it wants to adopt IFRS or not. Over two thirds (69 per cent) of respondents think the US should abandon its national accounting rules in favour of IFRS.
The full survey findings together with the in-depth views of finance leaders from five major insurers make for compelling reading and highlight how, as the standard setters attempt to implement a global reporting framework, the continued uncertainty in the timetable is leaving insurers playing a high-risk “waiting game”.