The first draft of controversial new international accounting standards for insurers has been released in London, promising to bring great change to the way insurers present their balance sheets.

The International Accounting Standards Board (IASB) released the draft late last week, saying the standards are intended to promote transparency and simplicity in insurers’ accounts. But they are being opposed by some of the most powerful figures in insurance. AIG Chairman and CEO Maurice Greenberg, Zurich CEO James Schiro and ING Chairman Ewald Kist are just some of the leaders who spoke out against them at the recent International Insurance Society conference in New York.

Mr Greenberg said the most controversial of the draft standards, fair value reporting, has “no place in the insurance industry”, while Mr Schiro told a media briefing the standards are “overkill” and were drafted without sufficient industry input.

But IASB Chairman Sir David Tweedie says a “widely respected accounting standard that addresses the many complex practical and conceptual problems in insurance accounting” is a top IASB priority.

Conceding that the IASB’s original implementation date of 2005 is too ambitious, Sir David said “consideration of all issues and viewpoints… could not possibly be completed by the 2005 deadline set in many jurisdictions”.

The “fair value” proposal requires insurers to value their assets at current market prices, while liabilities would continue to be valued under local accounting regulations. The insurers fear this would compromise their ability to account for long-tail liabilities.

For life insurers, there’s a provision just as bad: a recommendation that pension products be counted as investment rather than risk insurance contracts.  

The new standards – the IASB is planning more – have some strong proponents. National governments are demanding greater stability and certainty from the insurance industry; and investors want transparency and uniformity from an increasingly globalised industry. They say there is now a need to be able to compare companies’ performance using standardised accounting standards, rather than nationally based generally accepted accounting standards that make proper comparisons difficult if not impossible.