25 November 2009
Published in: Accounting - tax
Reporting standards are “harming the insurance industry”
Financial reporting standards are harming the insurance industry, according to a survey of 40 insurance analysts conducted by PwC this autumn.
The report of the survey, Making sense of the numbers, notes that the gap between participants' expectations and current practice is "considerable," and participants would like the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) to come up with a new and improved reporting framework as soon as possible.
In particular, a lack of transparency is leading to the under-valuation of a number of the world's leading insurance companies, according to the survey and most participants felt that insurance is distinctive enough to deserve its own reporting model.
The survey comes at key moment for reporting standards, with the IASB and FASB conducting an overhaul of insurance contract reporting.
Ian Dilks, global insurance leader at PwC, wrote in the report that "a surprise to us was the degree to which a consensus is emerging among the analysts interviewed on the fundamentals that they believe should form the bedrock of the new reporting framework. This consensus is rooted in a desire for reporting to reflect the economic reality of an insurer's business model."
The report follows a survey conducted in 2007 which showed similar levels of dissatisfaction with reporting standards. The 2009 survey was conducted through face-to-face interviews with analysts from US, Europe, Asia and Australia and covered a mix of life and non-life, buy-side and sell-side and equity and fixed-income analysts.