The developments in insurance financial reporting : an analysis

Abstract

Purpose: The main goal of this study was to analyse the international and local developments in insurance financial reporting, taking into consideration the recent adoption of the International Financial Reporting Standard 17 (IFRS 17) for insurance contracts. Design: To attain the research objectives, semi-structured interviews were held with representatives of local insurance and reinsurance companies, local consultancy, audit firms and the MFSA. In total eleven interviews were held, six interviews were held with insurance companies, four interviews with consultancy and / or audit firms and one interview was held with the regulator. Findings: The findings of this dissertation unveiled that there have been significant developments in insurance financial reporting, with the most recent development being the implementation of IFRS 17. Although IFRS 17 is now the standard under which insurance and reinsurance entities must account for insurance contracts, companies are still finding challenges in implementing this standard. Findings revealed that companies are still resistant to this change and lack comprehension of its significance. On the other hand, consultancy and audit firms can see the benefits of this standard. Moreover, the study highlighted that a local Generally Accepted Accounting Principles (GAAP) for small insurance entities and captives should be introduced. The future of the insurance industry is likely to be influenced by technological advancements, increased regulation, and sustainability, mainly Environmental, Social and Governance (ESG) issues. Conclusion: The study concluded shows that insurance financial reporting is different from the traditional reporting. Furthermore, although insurance and reinsurance entities are resistant to implementing IFRS 17, the sample gathered shows that most of them are prepared to comply with this requirement. Value: Since this is the first local study that analyses the developments in insurance financial reporting, it enhances the limited local literature about this topic and provides a platform for further analysis and / or similar analysis in other countries.