IFRS Updates And Impact On Chinese Insurance Industry

With rapid economic development in China, risk management has become more and more important in daily operation. As one of the best solution for risk management, insurance industry has experienced great expansion and internationalization in recent years, and some of the top insurance companies have made their IPO in Hongkong and New York. However, variety of accounting treatments made insurers’financial reports even more complicated, which failed to provide investors, analysts and others with the information they need to understand an insurer’s financial position and performance and to make meaningful comparisons between insurers. The Provisions on the Accounting Treatment Related to Insurance Contracts issued in 2009 eliminated differences and enhanced the consistency and comparability across entities, jurisdictions and capital markets, which brought great changes in insurance accounting theories as well as practices. Therefore, the thesis aims to understand its real impact on the insurance industry by using empirical analysis on financial performance of Chinese insurers, and providing suggestion for their future operation.Based on the discussion papers, exposure drafts and other related papers, the thesis outlines similarities and differences between IFRS4 and CAS. By analyzing financial data and introducing dummy variable, the thesis focuses on insurers’ changes in products, investment and financing and takes an empirical study of the IFR.S impact on Chinese insurers, which could provide profound insight into China’s insurance industry. The thesis has made the following conclusion:l.CAS has realized substantial convergence with IFRS.2. The convergence has brought changes to product structure, especially for life insurance.3. The convergence has eliminated difference in financial reports for A+H listed insurers, improved the information quality.4. New accounting rules help to release excess reserves, and boost the financial performance of the insurers, but meanwhile pose great challenges to insurers’investment and asset management ability. Therefore, insurers must improve their efficiency and ability and establish an effective risk control and management framework to insure stable growth towards internationalization.