Insurance and Pension Denmark (I&PD) has praised the introduction of the new accounting standard, International Financial Reporting Standards (IFRS) 17, which will be used by listed companies in the European Union (EU).

The Danish pension lobby said the news brings “joy to the insurance and pensions industry” as it believes the new standard will create increased transparency for company accounts.

The new accounting standard for listed companies in the EU must be applied for financial years starting on 1 January 2023. The standard has taken 20 years to develop and another four years to gain EU approval.

“We are incredibly pleased that the EU has finally approved the new accounting standard that makes financial reporting more consistent and comparable. It will increase transparency for our investors. In addition, it will contribute to a better understanding of the insurance and pension industry's business model,” I&PD CEO, Kent Damsgaard, said.

I&PD said that together with the European insurance industry, it has fought a fierce battle to add the option of not applying the grouping requirement referred to as the ‘annual cohorts’. The EU has accepted this demand, and it is to the great delight of the Danish life insurance companies.

“The change in the requirement for the annual cohorts has been greatly demanded by life companies. Both because the requirement will not add significant information value to the accounts, and because the implementation and ongoing operation of the annual cohorts would entail significant costs. We are really pleased that the EU has listened to the Danish requirements and that it has succeeded in finding an acceptable solution,” Damsgaard added.

The solution means that it is optional for companies whether to use IFRS 17, as issued by the International Accounting Standards Board (IASB), or whether to use IFRS 17 with the amendment given in the EU. If IFRS 17 is used outside the EU, it must be used as issued by the IASB. The European Commission must review the exemption from the requirement to use the annual cohorts by 31 December 2027.

IFRS 17 is implemented as a supplement to the IAS Regulation. This means that the standard is directly applicable to the companies covered and that there is no requirement for implementation in Danish regulation. There is therefore no formal requirement that the executive order on accounting is adapted to the new accounting standard.

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