Insurance sector calls for extra time to comply with accounting rules

Date: 23/05/02

EUROPE'S multi-billion-euro insurance industry is calling for the sector to be granted an extra year to comply with a new regime of international accounting rules.

The change, planned to start in 2005, is designed to make it easier for investors to compare firms listed on EU stock markets.

But the Paris-based Comité Européen des Assurance has warned that the timetable for adopting the new system set by the London-based International Accounting Standards Board (IASB) is too ambitious.

'Acting too hastily could seriously disrupt EU insurers,' said the group's deputy secretary-general, Jacques Léglu.

Accounting firms would have to change their internal systems and road-test the new standards well before the 2005 start date, he pointed out.

Worse still, many rules specifically earmarked for the insurance sector are still to be finalised by the IASB.

Another headache is the introduction of so-called fair-value accounting, intended to prevent firms from overstating their financial health and ability to meet claims.

'Since there is no market for [insurance] liabilities it is very difficult to tell [their value],' said Léglu.

Some companies have already started to change their reporting methods in line with draft proposals from the IASB. This led to an asset write-down of 564 million euro at Zurich Financial - a move which accelerated the departure of chief executive Rolf Hueppi.

Europe's multi-billion-euro insurance industry is calling for the sector to be granted an extra year to comply with a new regime of international accounting rules, planned to start in 2005.