European regulatory and judicial bodies are weighing in on issues that will impact insurers’ accounting requirements as well as the use of gender to determine premium rates.
Next week, the International Accounting Standards Board, London, will hold a board meeting during which it will discuss post-employment benefits including an exposure draft on defined benefit plans, recognition of changes in the defined benefit liability or asset as well as the disaggregation of changes in the defined benefit liability or asset.
Immediately following the IASB board meeting, will be a joint meeting of IASB and the Financial Accounting Standards Board, Norwalk, Conn. The fair value of a reporting entity’s own equity instruments will be discussed.
The decisions of the IASB and FASB as these bodies attempt converge international accounting standards over the next two years will have a major impact on insurers’ competitiveness and how they conduct address issues such as volatility, insurers say.
That competitiveness could be further challenged if the European Union moves to outlaw gender as an insurance risk factor. The October 11 issue of Moody’s Weekly Credit Outlook says that the opinion issued on September 30 by the Advocate General of the European Court of Justice would be a ‘credit negative’ for insurers. The opinion, according to the Moody’s piece by Blake Foster states that “such discrimination should be illegal.” However, according to Moody’s, the opinion would address the issue prospectively and use a three-year phase-in period.
Moody’s points out that the opinion is not legally binding but is often used by the Court. It says that it would regard such use as a ‘credit negative’ because it would take away a valuable pricing tool.