The Financial Stability Board (FSB) has welcomed publication of a new accounting standard for insurance contracts, and says insurers should begin implementation as soon as possible.

International Financial Reporting Standard 17 is expected to take effect on January 1 2021, giving insurers time to adapt processes, systems and organisational structures.

The FSB says insurers should consult with the International Accounting Standards Board and regulators on how to support consistent and practical application of the standard.

“Enhanced dialogue with auditors and market authorities during the implementation stage will also be important,” it says.

The standard aims to give investors more certainty around the reliance they can attach to estimates of insurance contract liabilities.

“Relevant disclosures from reporting entities should aid in the understanding of the methodologies and assumptions used in developing those estimates,” the FSB said.