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Global accounting standard for insurance contracts debated.

Article Excerpt
A proposed new standard for how insurers account for assets and liabilities would, if adopted worldwide, radically change insurers' financial reporting practices.

Insurance regulators and accounting bodies agree, though, that universally recognized standards are necessary for an industry that is now global. In addition, the increased complexity of insurance-related products and the lack of transparency in the financial reporting of insurance are drawing the attention of regulators.

Momentum to develop an international accounting standard for insurers increased following a ruling in March by the European Parliament that all publicly traded companies within the European Union must adopt international accounting standards recognized by E.U. officials by 2005.

Work to establish an internationally recognized financial accounting standard for insurance started in the late 1990s by the London-based International Accounting Standards Board.

Wayne Upton, research director of the IASB, said there has been a growing consensus that insurance-related reform efforts should focus on the accounting treatment of insurance contracts. That's because, he said, so many corporations in a wide variety of financial and industrial sectors use insurance-related contracts.

``Insurance is the last great unexplored territory of financial...