New international accounting rules could affect the island’s insurance industry as much as European Union Solvency II requirements, a professional services firm said yesterday.

Now PwC is to hold a live global seminar to highlight International Accounting Standards Board’s new accounting standards, known as IFRS 17.

A spokeswoman for PwC in Bermuda said: “IFRS 17 can impact insurers as much, if not more than, Solvency II.

“It will impact Bermuda insurers that report under IFRS, including domestic insurers, life insurers and reinsurers and certain commercial global reinsurers and insurers.”

Arthur Wightman, PwC Bermuda leader and insurance leader, said: “Insurance reporting is being redefined in one of the single-largest standard reforms in decades.

“Additionally, it will begin to mark a divergence between insurers, and indeed some banks, reporting under IFRS and those reporting under US standards.”

The new IASB rules are said to be the biggest change in accounting standards for two decades.

They were drawn up to align insurance company reporting frameworks across the globe and increase their consistency, comparability and transparency and will become effective at the start of 2021.

The standard, which will replace IFRS 4, is expected to have an international impact, with 125 jurisdictions using IFRS, while every insurance company that reports under the regime will have to adopt the updated framework.

Mr Wightman said: “IFRS 17 has taken many years to come to fruition and similarly it will require careful planning and implementation for those companies impacted.

“The IASB’s aim is to provide more transparency and comparability than the current accounting standards.

“It is, however, complex and the detail of the standard, together with the forthcoming guidance over implementation, will play a significant role in the ease or otherwise of adoption of the standard.”

Rating agency Standard & Poor’s welcomed the imminent changes but said it could prove challenging and costly for insurers.

“We welcome the increased comparability that IFRS 17 will bring,” S&P said in a statement yesterday. “Its introduction will make insurance accounting more consistent and transparent and will aid our rating of insurers globally.

“We do not, however, expect that the standard will have an immediate rating effect for insurers when it comes into force in 2021. Moreover, it could prove costly for insurers to implement and have longer-term implications on insurance business pricing.”

Alex Bertolotti, global IFRS insurance leader at PwC, added: “One thing is clear, particularly for life insurers — while ultimate profits will not change, the emergence of these profits can change significantly.

“Both insurers and their analysts will need to assess the full impact in terms of telling the performance story of their companies.

“Key performance indicators and income statements will look significantly different following implementation.

“There are things that firms should be doing now to understand and communicate the impact of different assumptions and approaches, as well as to assess the scale of work and resources required.”

The webcast, which will feature Darrell Scott, an IASB board member, will be held on Wednesday, May 31.

To find out more and register, go to http://www.pwc.com/gx/en/industries/financial-services/insurance/ifrs/webcast.html