U.S. insurers are fearful that an international regulatory group is moving to develop worldwide accounting standards with ill-considered speed, an executive for a North American trade group said.
In reaction they plan to voice their concerns at the summer meeting of the National Association of Insurance Commissioners next week in hopes the NAIC will slow the activity by their colleagues at the International Association of Insurance Supervisors, according to Douglas Barnert.
Mr. Barnert, executive director of the Group of North American Insurance Enterprises based in New York, said what is at issue is a paper dealing with accounting standards being developed by the supervisors group in Basel, Switzerland.
The paper being produced would be developed in time to give the international supervisors some input in the regulations being produced by the International Accounting Standards Board in London.
Their paper is titled, "Issues Arising As A Result Of The IASB's Insurance Contracts Project-Phase II; Second Set Of Observations."
In a May 28 letter to the supervisors, both property-casualty and life insurance trade groups said their memberships are aware that the supervisors want to release the paper so that it can "influence the direction of the IASB discussion paper…"
The paper needs more time to be properly developed, according to Mr. Barnert.
Insurers are willing to put in the necessary investment for a new accounting system, he said. However, implementing that system will come at a cost and insurers do not want to implement an approach that might not square with U.S. regulations and have the approval of the Financial Accounting Standards Board, Norwalk, Conn.
Among the international standards being discussed that the trade groups expressed concern over are:
o Discounting of certain non-life liabilities.
o Use of margins over current estimates for incorporating the liabilities of a contract life into a one-year time horizon, a method the trade groups called "a new and untested concept for measurement."
The standards board in London is scheduled to draft its discussion paper through December at which point there will be an 18-month exposure, followed by adoption and a two-year implementation process.
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