Insurers in the EU and other territories using IFRS operate under stop-gap rules that have never been fully fleshed out, leaving large differences between countries. This is the reason to set up new accounting rules.
New rules aimed at making insurers' notoriously opaque accounts more comprehensible to investors are set to be put forward for consultation this week. The IASB's proposal would require many companies to stop valuing liabilities at historic cost and use a more up to date method that reflects prevailing market conditions.
In a speech delivered in April, Hans Hoogervorst, IASB chairman, said that this had concerned many people in the insurance industry, who feared that such a move would make their accounts too volatile.
Mr Hoogervorst said that the inadequate accounting rules were masking the extent to which the insurance sector was being hurt by low interest rates because many insurers were still using historic interest rates in valuing their liabilities – a method that could make their future obligations appear smaller.
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