LONDON, (Reuters) – The new British body that oversees accounting regulations after Brexit has said there was “a lot of noise” coming from the 1.7 trillion pound insurance industry about ways to improve transparency and financial performance.
Britain’s departure from the European Union required it to establish its own body for endorsement of international accounting standards. This was previously done by Brussels. The first major test will be next month and the subject is IFRS 17 (insurance accounting rule).
Pauline Wallace is a veteran accountant who serves as interim chair for the UK Endorsement Board. She said that the UKEB will hold consultations in November to endorse the UKEB rule, which enters into effect globally on January 20, 2023.
Wallace stated to Reuters that Wallace was running up against a very tight deadline.
UKEB should consider the long-term effects of an accounting rule on UK’s economy, and compare it with other countries. The UKEB is keen to see Britain as a more attractive global investment hub following Brexit.
The International Accounting Standards Board has created IFRS guidelines for over 140 countries. They are also endorsed by national authorities for their use.
IFRS 17, one of the largest changes to insurers for decades, shines a light on a black box of balance sheets whose opaqueness had put off many investors.
Wallace indicated that the consultation would ask IFRS 17 to be used as the IASB has written it. Wallace also stated she hadn’t heard of any major ‘carve-outs’.
We cannot endorse. This is the nuclear option. Wallace stated, “I don’t think it’s something anybody wants.”
She anticipates that there will be a lot of noise from the industry regarding with-profits funding treatment.
“The insurance industry excels at communicating their opinions. This is not just for insurance companies. She said that investors are keen for better accounting to be part of insurance.”
Association of British Insurers stated that it has no comments on IFRS17 at the moment.
The EU will now place certain contracts within shorter time periods after heavy lobbying from Europe’s insurance sector. This is in response to a demand by insurers from southern Europe.
Wallace claimed she had not heard of similar moves in the UK.
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