The CFO of Munich Re has become the latest senior (re)insurance executive to criticise the incoming IFRS 17 global insurance accounting standard.
IFRS 17, which will be mandatory from January 2021, will make companies recognise profit when insurance services are delivered, rather than when premium payments are received.
Carriers will also have to provide information about insurance contract profits that are expected to be recognised in the future.
Jörg Schneider told the Financial Times that IFRS 17 would be very expensive for insurers and “due to its complexity, it will be difficult to understand for the public and the media”.
He called for a delay to the proposed 2021 implementation date, while conceding that the new system is an improvement on the current framework.
“In light of the necessary testing and potential refinement, a delay to IFRS 17 would be good. The more time we get to prepare, the higher the quality and consistency we can deliver,” he said.
Schneider’s comments follow criticism of IFRS 17 from several industry figures.
Earlier this year, Prudential CFO Nic Nicandrou said the new standard would involve “eye-watering” costs without necessarily bringing significant benefits. He added that the potential implementation costs for UK firms could be between £1bn and £2bn ($1.35bn to $2.70bn).