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Implications of IFRS for the European Insurance Industry—Insights From Capital Market Theory

Author

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  • Thomas Post
  • Helmut Gründl
  • Lisa Schmidl
  • Mark S. Dorfman

Abstract

The European insurance industry is currently undergoing a substantial change in financial reporting requirements. Beginning in 2005, compliance with the International Financial Reporting Standards (IFRS) has been required in the European Union. Substantial sections of the IFRS—leading to a market‐oriented valuation of insurance contracts—are still under construction and will be introduced in the next few years. To date, assessment of the potential impact of the new IFRS accounting and reporting system is largely found in trade literature, and in insurance industry business leader and expert commentator statements. The tenor of opinion is that the IFRS will create a serious challenge for the European insurance industry. To evaluate the impact of IFRS more scientifically, this article applies—where indicated—capital market theory and the concept of information efficiency. The article suggests that concerns about the effects of IFRS are exaggerated, and reveals that the main area of IFRS impact on the European insurance industry is likely to be on insurance product design.

Suggested Citation

  • Thomas Post & Helmut Gründl & Lisa Schmidl & Mark S. Dorfman, 2007. "Implications of IFRS for the European Insurance Industry—Insights From Capital Market Theory," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 10(2), pages 247-265, September.
    • Handle: RePEc:bla:rmgtin:v:10:y:2007:i:2:p:247-265
    DOI: j.1540-6296.2007.00117.x
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    4. Urska Kosi & Antonia Reither, 2014. "Determinants of Corporate Participation in the IFRS 4 (Insurance Contracts) Replacement Process," Accounting in Europe, Taylor & Francis Journals, vol. 11(1), pages 89-112, June.
    5. Abed Al-Nasser Abdallah & Wissam Abdallah & Feras M. Salama, 2018. "The Market Reaction to the Adoption of IFRS in the European Insurance Industry," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 43(4), pages 653-703, October.
    6. Hangsuck Lee & Hongjun Ha & Minha Lee, 2022. "Piecewise linear boundary crossing probabilities, barrier options, and variable annuities," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 42(12), pages 2248-2272, December.

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