The International Accounting Standards Board voted to propose a one-year delay on the effective date of the new insurance contracts standard, so it will take effect in 2022 instead of 2021.

The IASB also decided Wednesday to propose extending until 2022 the temporary exemption for insurers to apply the financial instruments standard, IFRS 9, so both IFRS 9 and the new insurance contracts standard, IFRS 17, can be applied simultaneously.

The IASB worked for several years to converge its insurance standard under International Financial Reporting Standards with the Financial Accounting Standards Board’s insurance standard under U.S. GAAP, but in 2014 the two boards decided to go their separate ways. IFRS did not have detailed accounting rules for insurance contracts, while U.S. GAAP already had them. In May of last year, the IASB issued IFRS 17 for various types of insurance contracts. In August of this year FASB issued a separate standard just for long-duration insurance contracts such as life insurance, disability income, long-term care and annuities that takes effect for public companies in 2021 and for private companies in 2022. The two boards were more closely aligned on the revenue recognition standard and they eventually agreed to delay its effective date for one year before it finally took effect for public companies this year. So far, FASB has not indicated any intention to defer the date for its standard for long-duration insurance contracts.

The IASB noted that it has been working proactively to support insurers and others with transitioning to the new insurance contracts standard, such as by setting up a Transition Resource Group and providing educational materials. As part of that process, it sought to understand any concerns that companies might have about their ability to get ready for the new insurance contracts standard by the effective date in 2021.

The decision to propose a one-year deferral at Wednesday’s meeting came as acknowledgement of the uncertainty that arose from the IASB’s discussions about IFRS 17, while being responsive to comments from stakeholders that implementation should not be unduly disrupted.

The proposed deferral is subject to public consultation, which is expected next year. The IASB said it expects to discuss the merits of potential amendments to the insurance standard during its December meeting. The criteria against which any possible amendment to the standard would be considered were agreed at the October meeting and can be found in the October update.