BRUSSELS (MarketWatch) -- Insurance companies are demanding that the E.U. Commission modify accounting standards to include special provisions for liabilities, something the companies say current standards don't do adequately.
 
Internal markets commissioner Charlie McCreevy's team is working on standards for insurance companies that will enter into effect in July 2007.

The new IFRS corporate accounting standards that came in last year are "inadequate" for insurance companies, Helmut Perlet, chief financial officer of Allianz Group (AZ), told a conference of insurance CFOs Thursday.

The CFOs are lobbying the commission to write rules that allow companies to avoid accounts that look excessively volatile and unpredictable to investors and analysts.
Insurance executives fear their companies will appear too risky, leading to higher lending rates and lower profits.

They argue that insurance companies should be allowed to calculate profits for insurance contracts based on the entire term of the contract. That would allow them to compare income directly with payouts, and show the profit on every deal.
Booking a loss every time an insurance company has to pay for an accident creates an impression of volatility on a company's books, said Morag Elaine Fullilove, who represents U.S. insurance companies in Brussels.

Another problem is that without clear guidelines, national regulators still require different standards. The CFOs, and the commission, would like to set up common rules throughout the E.U.

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