Insurance Europe and the CFO Forum have written to the European Financial Reporting Advisory Group (EFRAG) in a response to the draft endorsement advice on International Financial Reporting Standards (IFRS) 9 for financial instruments.
The insurance industry supports the endorsement of IFRS 9 in the EU, provided that its effective date for insurers is aligned with the future insurance contracts standard, IFRS 4 Phase II.
Adopting IFRS 9 ahead of IFRS 4 Phase II will have a significant negative impact on the insurance industry and the users of insurers' financial statements.
The reasons are twofold: on the one hand there will be accounting mismatches during the interim period which will negatively effect the relevance of the statements of financial performance. Secondly, insurers will face two significant changes to their assets and liabilities at consecutive and separate times.
Consequently, the letter requested that EFRAG advise the European Commission to ask the International Accounting Standards Board (IASB) to defer the implementation of IFRS 9 for insurers, until IFRS 4 Phase II is available. However, if this global solution will be unavailable, the Commission should enable a deferral for insurance companies in Europe.