Efforts to bring U.S. and international insurance accounting standards closer together could create challenges for domestic insurers.
Rob Jones, a managing director at Standard & Poor’s, New York, issued that warning here during a recent panel discussion at an S&P insurance conference.
“There is a train coming down the tunnel, and it may be a freight train,” Jones said.
The changes could be especially challenging for smaller insurers, Jones said.
Much of the discussion at the S&P panel discussion focused on a request by the International Accounting Standards Board, London, for comments about the idea of requiring insurers to apply fair value accounting rules to their liabilities.
“Fair value accounting” rules require a company to use a market price for a balance sheet entry, where a market price is available, or an estimation of a market price based on the present value of expected cash flows, according to the European Central Bank.
Several conference panelists questioned the idea of applying fair value accounting principles to insurance liabilities.