Key accounting and financial reporting developments for insurers in 2026
The 2026 reporting cycle brings important changes for insurers under UK Generally Accepted Accounting Practice (UK GAAP) and International Financial Reporting Standards (IFRS), affecting data, controls, judgements and disclosures. This article covers selected key developments rather than a comprehensive checklist of all changes effective in 2026.
Amendments to FRS 102 make 2026 a major implementation year for UK GAAP reporters. Other IFRS changes are narrower but may still be significant, especially for investment portfolios. In addition, insurers now need to reflect economic uncertainty, market volatility and regulatory scrutiny in their estimates, valuations and narrative reporting.
UK GAAP Reporters
FRS 102 changes: what UK insurers need to prepare for in 2026
Most amendments arising from the Financial Reporting Council’s Periodic Review 2024 apply to annual reporting periods beginning on or after 1 January 2026. Calendar year insurers that have not early adopted will therefore apply these revised requirements for the first time in their financial statements for the year ended 31 December 2026. Supplier finance arrangement disclosures became effective earlier, for periods beginning on or after 1 January 2025.
Insurance contracts continue to be accounted for under FRS 103; the Periodic Review 2024 amendments do not introduce an IFRS 17-style insurance accounting model. However, insurers also apply FRS 102 to other relevant transactions and balances, so the revised requirements may affect significant parts of their financial statements.
Lease accounting under FRS 102: bringing leases onto the balance sheet
Revised Section 20 introduces an on-balance-sheet model for lessees, requiring recognition of a right-of-use asset and lease liability for most leases, subject to exemptions for short-term leases and leases of low-value assets.
Insurers should already have identified their property, vehicle and equipment leases. They should also review outsourcing and technology contracts for embedded leases, particularly where the insurer controls the use of identified IT infrastructure or other dedicated assets.
Bringing leases onto the balance sheet will change the timing and presentation of expenses. Operating lease costs will generally be replaced by depreciation and interest. This may affect reported metrics, such as EBITDA and gearing or leverage ratios, and covenant calculations, depending on their definitions, even though the underlying cash flows remain unchanged.
Revenue recognition considerations for insurers under revised FRS 102
Revised Section 23 introduces a five-step model for revenue from contracts with customers. Insurance contracts within FRS 103 remain outside its scope, as do financial instruments and contractual rights and obligations within the relevant financial instrument requirements. Insurers should nevertheless assess service fee income, including investment management or administration fees where these fall within Section 23.
Relevant arrangements may include services provided to other entities or group companies, such as policy administration, claims handling, asset management and risk advisory, under separate service arrangements within Section 23. Management will need to identify separate performance obligations, assess variable consideration and determine whether revenue is recognised at a point in time or over time. Intragroup service revenue is eliminated on consolidation.
Transition requirements differ between the amendments: lessees do not restate comparative information for revised Section 20, while the transition options for revised Section 23 require separate assessment.
Fair value measurement requirements under the new FRS 102 framework
The new Section 2A creates a single framework for fair value measurement, broadly aligned with IFRS 13. This is particularly relevant to insurers who measure items at fair value such as investments, investment property and financial instruments involving significant valuation judgement.
Insurers should revisit valuation techniques, fair value hierarchy classifications, third-party pricing information and controls over unobservable inputs. Existing valuations may not change, but more structured analysis and documentation may be necessary.
IFRS Reporters
IFRS 9 and IFRS 7 amendments: implications for insurers’ investment portfolios
For IFRS reporters, amendments to IFRS 9 and IFRS 7 apply for annual reporting periods beginning on or after 1 January 2026. These clarify the classification of financial assets with contingent features, including instruments with environmental, social and governance-linked terms.
Insurers should screen their bond, loan and private credit portfolios for terms that may affect the assessment of whether contractual cash flows represent solely payments of principal and interest. A change in classification could affect profit or loss and other comprehensive income.
The amendments also clarify the assessment of non-recourse features and contractually linked instruments, and introduce additional disclosures for financial instruments with contingent contractual features and equity investments designated at fair value through other comprehensive income.
The amendments clarify recognition and derecognition timing for electronic cash transfers and permit earlier derecognition of certain financial liabilities settled through electronic payment systems where specified conditions are met. This accounting policy option does not extend to earlier recognition of incoming cash.
IFRS 17 developments and disclosure considerations for insurers
Although IFRS 17 is no longer new, its application continues to develop. On 1 October 2026, the UK Endorsement Board (UKEB) issued a Request for Information as part of its UK-focused Post-Implementation Review (PIR) of IFRS 17, focusing on implementation issues. Insurers and other stakeholders can respond via email to the UKEB until 30 December 2026. This is separate from the IASB’s PIR and does not itself amend IFRS 17.
For 2026, insurers should challenge whether disclosures explain the drivers of the insurance service result, movements in insurance and reinsurance contract balances, changes in assumptions and, where applicable, the contractual service margin. Entity-specific explanations are more useful to users of the financial statements than descriptions that simply repeat the standard.
Preparing for IFRS 18: upcoming presentation and disclosure requirements
IFRS 18 has been adopted for use in the UK and applies for annual reporting periods beginning on or after 1 January 2027. It introduces a more structured income statement, disclosures for management-defined performance measures and enhanced aggregation and disaggregation requirements. The standard applies retrospectively: calendar-year insurers adopting in 2027 will need to restate their 2026 comparative information.
Insurers should complete their impact assessment and capture the information needed for restated comparatives. Their 2026 financial statements should also provide the applicable disclosures about IFRS 18 as a standard issued but not yet applied, including known or reasonably estimable information about its expected impact.
Insurers should assess the classification of investment returns and insurance finance income and expenses, taking account of the specific requirements for their activities, and identify which publicly communicated performance measures meet the definition of management-defined performance measures. Not every alternative performance measure meets that definition.
Insurance financial reporting priorities for the 2026 year-end
With the 2026 year-end approaching, insurers should be completing implementation, validating transition calculations and resolving outstanding accounting judgements, data gaps and disclosure requirements. Those applying FRS 102 need to finalise their impact assessments, quantify transition adjustments and update accounting policies, controls and disclosures. IFRS reporters should review investment portfolios and disclosures under the amended IFRS 9 and IFRS 7 requirements, revisit the quality of their IFRS 17 disclosures and, for calendar year insurers adopting IFRS 18 in 2027, ensure the information needed to restate 2026 comparatives is captured.
Early coordination across finance, actuarial, investment, tax and audit teams will be important, and addressing significant judgements and data gaps before the year-end close will reduce the risk of late adjustments and support a more controlled and efficient reporting cycle.
How we can help
The 2026 reporting cycle presents significant accounting and financial reporting challenges for insurers, from implementing revised FRS 102 requirements to addressing ongoing IFRS 17 developments and preparing for IFRS 18.
Our insurance specialists work with insurers, Lloyd’s syndicates and managing agents on accounting advisory, financial reporting, audit and regulatory reporting matters.
If you would like to discuss the impact of these changes on your business, contact Michael Marslin or James Randall.
Explore the latest edition of Insurer Update to discover expert insights, articles and industry updates from our Insurance Carrier team.
