IASB Insurance Presents “New World” for Insurance
Insurance contracts have a greater impact on the overall performance of the firm such as financial position, performance and cash flow. According to the Accountancy Age's sister title Post reports the exposure draft helps us analyze the effects on the firms when changes are made in presentation and measurements of the contract.
While speaking on the changes in the insurance contract, Joachim Kölschbach, KPMG's global IFRS insurance leader believes that these changes will bring up major difference in the firm’s performances. He said that regulations as a result of International financial reporting standards (IFRSs) in EU have been analyzed but the insurers will face more changes as a result of insurance contract.
The major aim of IASB is to create the transparency which is significant for the overall firm’s performance; therefore IASB plans to implement a standardized insurance reporting so that transparency is achieved.
Joachim Kölschbach, KPMG's global IFRS insurance leader further added that by implementing changes in insurance contract a new world of insurance will be achieved where stakeholders would be able to identify valuable changes and comparability in the firm’s performance. IASB in this regard have mentioned the new key points related to the quantifications so that firm can identify estimates of future profits.
IASB is seeking to provide balance sheets so that the performances can be measured and compared before and after the rules being set. The rules set will not allow any sort of mismatch on an insurance contract and assets and thus making it all transparent.
In the new world of insurance the experts believe that there will be rapid changes in the profit and loss accounts of insurers, also more clear picture of risks and liabilities will be achieved in this regard.
PWC's global accounting services financial instruments leader Gail Tucker believe that with adoption of this standard the insurers will require to repair their systems and reporting. Further added, it will enhance the global comparability.IASB will gather feedback on these changes in period to run until 25 October and "field testing" and "outreach activities" will be covered as well. The new rules will be effective 2018 onwards.