Exclusive: Insurance industry expects a lot of noise from Brexit

Exclusive: Insurance industry expects a lot of noise from Brexit

LONDON Reuters - The new body overseeing accounting rules since Brexit says it was braced for a lot of noise from the 1.7 trillion pound $2.33 trillion industry sector about measures to increase transparency of financial positions and performance.

Departure from the European Union required Britain to start its own body to endorse international accounting rules, a task previously undertaken by Brussels, with the first big test next month involving insurance accounting rule IFRS 17.

Pauline Wallace, a 30 year veteran in accounting who is interim chairman of the UK Endorsement Board (UKEB) said that the body will consult in November on endorsing the rule which comes into force globally in January 2023.

Wallace told Reuters: "We are fighting a very tight deadline here".

The UKEB must take into account the long-term impact of an accounting rule on the UK economy and its competitiveness compared with Europe and elsewhere, with government keen for Britain to bolster its attractiveness as a global investment centre following Brexit.

IFRS Rules are approved for use by IASB and written at national level to use.

IFRS 17 represents one of the biggest changes for insurers in decades, shining a light into a white box of balance sheets whose opaqueness has motivated many investors

Wallace said the consultation would ask if IFRS 17 should be written as it was developed by the IASB, adding that she has not heard any calls for major 'carve outs'.

What we can not endorse cannot also be an advocate. I don't think that's anything anybody wants, Wallace said.

She expects a lot of noise from industry, particularly over the treatment of with-profit funds.

The insurance industry makes their viewpoints known. Insurance companies are not the only stakeholders in this problem. We have a very clear directive for better accounting in insurance, she told Reuters.

The Association of British Insurers said it had no comment on IFRS 17 at this stage.

Following heavy lobbying by the European insurance sector, the EU is putting some contracts into shorter time brackets, a key demand from insurers in southern Europe.

Wallace said she had not heard calls for a similar move in the UK.