INSURERS have met to discuss fears surrounding the possible impact of phase II of International Financial Reporting Standards, saying the move “would introduce very significant but really meaningless volatility”.
These are the words of Allen Loney, president and CEO of Great-West Life, who was speaking at a recent International Insurance Society seminar, reports Reactions.
He said the second phase of global standards is entirely disconnected from the business model, adding: “It is going from black box to black hole.”
Insurers favour IFRS rules for reporting proper defaults of assets and the effect of rating downgrades, but are worried about new treatment for discounting of reserves, saying during the recent financial crisis, phase II-style reporting would have created extreme volatility from quarter to quarter.
The International Accounting Standards Board is currently working on IFRS 4 Insurance Contracts; the standard is due to be completed by the end of the year but the implementation date is as yet unconfirmed.
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