NU Online News Service, August 10, 2004, 12 p. m. EST
Most chief financial officers of North American insurers think the U.S. and Canada eventually will embrace an international accounting standard for insurance firms.[@@]
In a survey by the Tillinghast business of Towers Perrin, Stamford, Conn., 81% of CFOs said they think that the U.S. and Canada will join Europe in adopting a common accounting standard for insurance within the next 10 years.
But only 28% think global standards will be adopted in the next 5 years. And opinion was split on whether fair value would be the chosen standard, Tillinghast found.
66% believe fair value is likely to become the accepted insurance industry standard in their country, regardless of whether a global standard is adopted. All other respondents expect the accepted standard to include some aspects of fair value but not necessarily include it in full.
Tillinghast notes that neither U.S. GAAP (generally accepted accounting principles) nor traditional statutory financial reporting focus on the creation of long-term value. For insurers, that is a significant limitation of these traditional accounting approaches.
The survey found nearly three-quarters of insurance company respondents used more than one financial reporting measure to evaluate internal performance, and 41% used three or more measures.