Standards - Insurer funds hit by SORP
Insurers will have to include changes in the valuations of investments on their profit & loss accounts for the first time under a new statement of recommended practice published by the Association of British Insurers.
Since 1995, insurers have had to adhere to a European Commission directive, as well as the Companies Act, in producing accounts. The SORP, which has been supported by the Accounting Standards Board, will cover all financial years ending in 1999 and beyond.
The ABI hopes the new standard – which it has drawn up in consultation with the ASB, the trade and industry department and big insurers like CGU and Prudential – will bring greater uniformity to insurers’ accounts. Current EC rules allow for a number of options in the accounting treatment of investments. The standard also clarifies certain Companies Act requirements.
‘In addition to enhancing the usefulness of insurers’ published accounts, it should influence the work which the International Accounting Standards Committee has initiated on a new international accounting standard for insurance,’ said ABI director general Mark Boleat.
The ABI is expected to issue an exposure draft on life insurance business later this year.