The International Accounting Standards Board (IASB) has proposed delaying the implementation of its new IFRS 17 reporting standard by one year to 2022.

The accounting standard for insurance contracts was originally scheduled to come into effect from January 2021, but there have been calls from the insurance industry around the world to delay the standard for two years in order to prepare for such a significant change.

The new IFRS 17 rules require companies to recognise profit when insurance services are delivered, rather than when premium payments are received, as well as to provide information about insurance contract profits that are expected to be recognised in the future.

Last month, a global group of nine insurance associations penned a joint letter to Hans Hoogervorst, chair of the IASB, underscoring concerns surrounding IFRS 17’s impact on insurance contracts.

The proposed deferral is subject to public consultation, which is expected next year.

In addition, the IASB has proposed to postpone the implementation of IFRS9, the accounting standard for financial instruments, by one more year so that it will now come into effect alongside the implementation of IFRS 17.

“The board has proactively been working to support insurers and others with the transition to the new insurance contracts standard, including through establishing a Transition Resource Group and providing education materials. As part of that process, it has sought to understand any concerns companies may have about their ability to get ready for the new insurance contracts Standard by the 2021 effective date,” the global accounting body said in a statement.

“The decision to propose a one-year deferral at this meeting acknowledges the uncertainty that arises from the Board’s discussions about IFRS 17, while being responsive to comments from stakeholders that implementation should not be unduly disrupted. By making this decision, the Board has provided a clear direction, which will help companies with their planning,” it added.

IASB said that it expects to discuss the merits of potential amendments to the standard during its December meeting.