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Insurance: in or out of the ‘too difficult’ box?


  • Sudipta Basu
  • Martin F. Grace


IFRS 17 requires a significant change to insurer accounting, and we look at some of the frictions resulting from its implementation. We make three points. First, since IFRS 17 is a principles-based standard, it will be costly to implement. Audit committees must become sophisticated users of the underlying models generating the reports. Second, we examine the effect of the Sarbanes-Oxley Act on U.S. public insurers and a similar law for private insurers to assess the costs of complying with new rules. We find evidence that these costs vary in their incidence across the industry. Third, we conduct an event study of specific announcements regarding IFRS 17 promulgation and implementation. We find a negative sentiment for announcements concerning the implementation. However, we cannot identify a single specific rationale for the negative sentiment as it could be related to several factors. In sum, we find that there are many reasons to keep insurance accounting as part of IFRS and some reasons that may lead to delays in implementation, but any concern this accounting standard is ‘too difficult’ is likely not due to the standard itself but to other things that may reflect the ultimate net benefits of the standard to investors.

Suggested Citation

  • Sudipta Basu & Martin F. Grace, 2022. "Insurance: in or out of the ‘too difficult’ box?," Accounting and Business Research, Taylor & Francis Journals, vol. 52(5), pages 510-535, July.
  • Handle: RePEc:taf:acctbr:v:52:y:2022:i:5:p:510-535
    DOI: 10.1080/00014788.2022.2080350

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