The Ministry of Finance and the State Financial Regulatory Commission have recently issued a notice to further strengthen guidance on the implementation of Accounting Standard for Business Enterprises No. 25 — Insurance Contracts (hereinafter referred to as the “new Accounting Standard for Insurance Contracts”), it was learned from the Ministry of Finance on June 15.
Key Points of the Notice
Purpose:
The notice aims to further detail the implementation arrangements and guidance for the new accounting standards for insurance contracts. It provides a simplified treatment option for non-listed enterprises and sets requirements for the organization and implementation of the new standards.
Implementation Requirements:
Domestic and Overseas Listed Enterprises: Companies that are listed both domestically and overseas, or only listed overseas and prepare financial statements in accordance with International Financial Reporting Standards (IFRS) or Accounting Standards for Business Enterprises, as well as those that have already implemented the new accounting standards for insurance contracts before the implementation of this notice, shall continue to implement the new accounting standards for insurance contracts.
Other Enterprises: Other enterprises that implement the Accounting Standards for Business Enterprises shall implement the new accounting standards for insurance contracts starting from January 1, 2026.
Special Considerations:
Insurance Companies with Difficulties: Insurance companies that face genuine difficulties and need to suspend execution of the new standards must submit written materials to the Accounting Department of the Ministry of Finance and the Department of Institutional Supervision of the State Financial Regulatory Commission to explain the reasons.
Background and Implications
The new Accounting Standard for Insurance Contracts is designed to improve the transparency and consistency of financial reporting in the insurance sector. By providing clear guidelines and simplified options for non-listed enterprises, the notice aims to facilitate a smoother transition to the new standards. This move is expected to enhance the overall quality of financial information and support better decision-making for stakeholders in the insurance industry.
The implementation timeline and the provision for companies facing difficulties reflect a balanced approach that considers both regulatory compliance and practical challenges faced by enterprises. This should help ensure that the new standards are applied effectively while minimizing disruptions to the industry.
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