Describing the standard as ‘setting out a single, consistent approach to the accounting for insurance contracts’, the FSB said it was encouraging firms to start the implementation efforts as soon as possible, and to engage in open dialogue with the IASB on the ways in which the standard’s application can generate the most relevant information.

The FSB said: ‘Insurance regulators should be part of this dialogue, and may consider how best to support consistent and practical application of the standard.’

Under IFRS 17, insurance obligations will be accounted for using current values, instead of historical cost. The standard is due to become effective on 1 January 2021, which the FSB said provides enough time for insurers to adapt processes, systems and organisational structures. However, the FSB cautioned that ‘enhanced dialogue’ with auditors and market authorities during the implementation stage will also be important.

The FSB said: ‘Investors need certainty around the degree of reliance they can attach to estimates of insurance contract liabilities. Relevant disclosures from reporting entities should aid in the understanding of the methodologies and assumptions used in developing those estimates.’

Hans Hoogervorst, chairman of the IASB board, said: ‘IFRS 17 will provide important insight into insurance companies' risk exposure and performance, which—in turn—will contribute to financial stability. It is therefore an important contribution to the FSB's mission of strengthening the stability in the financial sector.’

The FSB’s statement on IFRS 17 is here.