According to the Financial Times, the CFO of German reinsurance giant Munich Re has joined other companies calling for a delay to the implementation of the IFRS 17 (International Financial Reporting Standards) international accounting regime.
IFRS 17 is an international IFRS Standard for the accounting of insurance contracts. The rules are designed to make it easier to identify which insurance contracts are profit-making or loss making and to analyse trend information on insurance contracts.
Under the rules, which are scheduled to come into force in 2017, insurers and reinsurers would have to report information about insurance contracts they issue and reinsurance contracts they may hold. This is expected to add transparency for investors and make regulators jobs easier as well.
The concern among industry players is over the extra work and time involved in shifting to the new IFRS 17 accounting regime, and Munich Re has now joined others, including Prudential and Aviva, that have expressed concern over the implementation of IFRS 17 and requested it be delayed or postponed.
Munich Re CFO Jorg Schneider told the Financial Times that while IFRS 17 would be better than the current system, he believes it will be “very expensive” and complex for the public or media to understand.
He also said that “a delay to IFRS 17 would be good” as having more time to prepare would mean companies can implement the rules more effectively.
It’s not just re/insurers that are concerned though, investor Blackrock also raised concerns about the IFRS 17 rules, suggesting that the burden of implementing and adopting it could be greater than the benefits gained.
