Implications of IFRS for the European Insurance Industry - Insights from Capital Market Theory

Risk Management and Insurance Review, Vol. 10, No. 2, pp. 247-265, September 2007

Posted: 19 Jan 2018

See all articles by Thomas Post

Thomas Post

Maastricht University - School of Business and Economics - Department of Finance; Netspar

Helmut Gründl

Goethe University Frankfurt - Department of Finance; International Center for Insurance Regulation

Lisa Schmidl

Humboldt University of Berlin - School of Business and Economics

Mark S. Dorfman

University of North Carolina (UNC) at Charlotte

Multiple version iconThere are 2 versions of this paper

Date Written: June 13, 2007

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 paper applies where indicated capital market theory and the concept of information efficiency. The paper 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.

Keywords: IFRS, Insurance, Information Efficiency, Cost of Capital, IFRS 4, Fair Value

JEL Classification: G14, G22, M41

Suggested Citation

Post, Thomas and Gründl, Helmut and Schmidl, Lisa and Dorfman, Mark S., Implications of IFRS for the European Insurance Industry - Insights from Capital Market Theory (June 13, 2007). Risk Management and Insurance Review, Vol. 10, No. 2, pp. 247-265, September 2007. Available at SSRN: https://ssrn.com/abstract=3103753

Thomas Post

Maastricht University - School of Business and Economics - Department of Finance ( email )

Tongersestraat 53
Maastricht, 6200 MD
Netherlands
+31 43 38 83899 (Phone)
+31 43 38 84875 (Fax)

HOME PAGE: http://www.thomas-post.com

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.netspar.nl

Helmut Gründl (Contact Author)

Goethe University Frankfurt - Department of Finance ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, Hessen 60323
Germany

HOME PAGE: http://https://www.wiwi.uni-frankfurt.de/en/departments/finance/home.html

International Center for Insurance Regulation ( email )

House of Finance
Campus Westend, Goethe University
Frankfurt am Main, D-60323
Germany

HOME PAGE: http://www.icir.de

Lisa Schmidl

Humboldt University of Berlin - School of Business and Economics ( email )

Spandauer Str. 1
Berlin, D-10099
Germany

Mark S. Dorfman

University of North Carolina (UNC) at Charlotte ( email )

9201 University City Boulevard
Charlotte, NC 28223
United States

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