From Hidden Reserves to Transparent Prudence: IFRS 17, Profit Recognition, and Institutional Diffusion in the Insurance Sector. Evidence from Albania and European Benchmarks
Keywords:
IFRS 17, contractual service margin, disclosure quality, process tracing, Western BalkansAbstract
Objectives. We show how prudential profit deferral in life insurance is recast by IFRS 17 into explicit, auditable mechanics. For Albania, the standard is not yet applied; 2024 materials are interim or management and unaudited. Prior Work. We build on literatures on prudence versus transparency and institutional diffusion, and on early European note architecture. Approach. We combine process tracing of European and Albanian milestones with a structured 20-item disclosure rubric applied to six insurers (three in Albania; three European benchmarks), and compute three simple presence-only indices of disclosure breadth and IFRS 17-specific innovation, excluding not-applicable items and documenting page-level locators. Results. Audited 2023 European annual reports show CSM/RA roll-forwards, revenue bridges, and explicit discount-rate policies. Albanian 2024 artefacts show elements where presented; absence at interim is treated as not applicable. Implications. Before 2025, no compliance claims are made for Albania. Preparers should standardise templates, quantify the risk adjustment where material, and publish concise bridges to prudential views; supervisors can reinforce interim guidance. Value. We articulate “transparent prudence” and provide a reproducible small-market benchmarking template. Albania-specific caveat: evidence is unaudited, parallel-run, and limited to what is publicly presented; indices are presence only and may be affected by interim windows and not-applicable treatment.
References
Albanian Financial Supervisory Authority. (2023). Guideline No. 146 (31 August 2023) on the application of IFRS 17. https://amf.gov.al/
Albanian Financial Supervisory Authority. (2024). Annual report 2023. https://amf.gov.al/
Albu, N., Albu, C. N., Bunea, S., Calu, D. A., & Gîrbină, M. M. (2011). A story about IAS/IFRS implementation in Romania: An institutional and structuration theory perspective. Journal of Accounting in Emerging Economies, 1(1), 76–100.
Alexander, D., Carungu, J., & Vignini, S. (2022). IFRS meets the realities of a post-communist Balkan state. Accounting and Management Information Systems, 21(2), 141–173.
Baker, C. R., & Barbu, E. M. (2007). Trends in research on international accounting harmonisation. The International Journal of Accounting, 42(3), 272–304.
Barth, M. E., Landsman, W. R., & Lang, M. H. (2008). International accounting standards and accounting quality. Journal of Accounting Research, 46(3), 467–498.
Basu, S. (1997). The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics, 24(1), 3–37.
Beach, D., & Pedersen, R. B. (2019). Process-tracing methods: Foundations and guidelines (2nd ed.). University of Michigan Press.
Bennett, A., & Checkel, J. T. (Eds.). (2015). Process tracing: From metaphor to analytic tool. Cambridge University Press.
Botosan, C. A. (1997). Disclosure level and the cost of equity capital. The Accounting Review, 72(3), 323–349. https://www.jstor.org/stable/248475
Brüggemann, U., Hitz, J.-M., & Sellhorn, T. (2013). Intended and unintended consequences of mandatory IFRS adoption: A review of extant evidence and suggestions for future research. European Accounting Review, 22(1), 1–37.
Carnegie, G. D., & Napier, C. J. (1996). Critical and interpretive histories: Insights into accounting’s present and future through its past. Accounting, Auditing & Accountability Journal, 9(3), 7–39.
Christensen, H. B., Hail, L., & Leuz, C. (2013). Mandatory IFRS reporting and changes in enforcement. Journal of Accounting and Economics, 56(2–3), 147–177.
Council of the European Communities. (1991). Council Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated accounts of insurance undertakings. Official Journal of the European Communities, L 374, 7–31. https://eur-lex.europa.eu/eli/dir/1991/674/oj
Daske, H., Hail, L., Leuz, C., & Verdi, R. (2008). Mandatory IFRS reporting around the world: Early evidence on the economic consequences. Journal of Accounting Research, 46(5), 1085–1142.
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality. American Sociological Review, 48(2), 147–160.
European Financial Reporting Advisory Group. (2020). IFRS 17 Insurance Contracts: Final Endorsement Advice (including June 2020 amendments). https://www.efrag.org/
European Insurance and Occupational Pensions Authority. (2024). Report on the implementation and first-year observations of IFRS 17. https://www.eiopa.europa.eu/
European Insurance CFO Forum. (2009). Market Consistent Embedded Value (MCEV) principles (Amended edition).
European Securities and Markets Authority. (2024). From “black box” to “open book”? Evidence from the first application of IFRS 17 Insurance Contracts (ESMA32-1188985980-1046). https://www.esma.europa.eu/
Fitch Ratings. (2022). IFRS 17: Expected impacts on insurers’ financial statements. https://www.fitchratings.com/
Fletorja Zyrtare e Mbretërisë së Shqipërisë, Nr. 15 [Official Gazette of the Kingdom of Albania, No. 15]. (1925). https://www.bksh.al/burime/fletore_zyrtare1
Fletorja Zyrtare e Mbretërisë së Shqipërisë, Nr. 27 [Official Gazette of the Kingdom of Albania, No. 27]. (1939). https://www.bksh.al/burime/fletore_zyrtare1
Hail, L., & Leuz, C. (2006). International differences in the cost of equity capital: Do legal institutions and securities regulation matter? Journal of Accounting Research, 44(3), 485–531.
Hopwood, A. G. (1983). On trying to study accounting in the contexts in which it operates. Accounting, Organizations and Society, 8(2–3), 287–305.
International Accounting Standards Board. (2017a). IFRS 17 Insurance Contracts. IFRS Foundation. https://www.ifrs.org/issued-standards/list-of-standards/ifrs-17-insurance-contracts/
International Accounting Standards Board. (2017b). IFRS 17 Insurance Contracts: Effects analysis. IFRS Foundation. https://www.ifrs.org/content/dam/ifrs/project/insurance-contracts/ifrs-standard/IFRS 17-effects-analysis.pdf
International Accounting Standards Board. (2017c). Project summary and feedback statement: IFRS 17 Insurance Contracts. IFRS Foundation https://www.ifrs.org/content/dam/ifrs/project/insurance-contracts/ifrs-standard/IFRS 17-project-summary.pdf
International Accounting Standards Board. (2018). Conceptual framework for financial reporting. IFRS Foundation.
International Actuarial Association. (2020). IFRS 17 Insurance Contracts: A resource for the actuarial profession. https://www.actuaries.org/
Judge, W., Li, S., & Pinsker, R. (2010). National adoption of international accounting standards: An institutional perspective. Corporate Governance: An International Review, 18(3), 161–174.
KPMG. (2020). First impressions: IFRS 17 Insurance Contracts (updated for June 2020 amendments).
Krippendorff, K. (2018). Content analysis: An introduction to its methodology (4th ed.). SAGE.
Lambert, R. A., Leuz, C., & Verrecchia, R. E. (2007). Accounting information, disclosure, and the cost of capital. Journal of Accounting Research, 45(2), 385–420.
Landis, J. R., & Koch, G. G. (1977). The measurement of observer agreement for categorical data. Biometrics, 33(1), 159–174.
Meka, E., & Korsita, E. (2022). The insurance market in Albania: Degree of concentration and consequences on the economy. Economicus, 22, 27–45. https://uet.edu.al/economicus/articles/the-insurance-market-in-albania-the-degree-of-concentration-and-consequences-on-the-economy-no-22/
Miles, S. P., & Gubbay, K. (1987). Realistic financial reporting. Transactions of the Institute of Actuaries of Australia, 2, 704–787.
Miller, P., & Napier, C. (1993). Genealogies of calculation. Accounting, Organizations and Society, 18(7–8), 631–647.
Miti, M. U., & Dhamo, S. (2018). The impact of accounting reforms in financial reporting: Case of Albania. European Journal of Economics and Business Studies, 4(2), 52–66.
Nobes, C., & Parker, R. (2020). Comparative international accounting (14th ed.). Pearson.
PricewaterhouseCoopers. (2023). IFRS 17: What investors need to know in year one.
Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards. (2002). Official Journal of the European Communities, L 243, 1–4. https://eur-lex.europa.eu/eli/reg/2002/1606/oj
Reka, A., & Kosova, R. (2024, November). The Albanian insurance market through history, development and future challenges. In 6th International Conference on Applied Engineering and Natural Sciences (pp. 485–492), Konya, Turkey. https://www.researchgate.net/publication/386048740_The_Albanian_Insurance_Market_through_History_Development_and_Future_Challenges
Solvency II: Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (recast). (2009). Official Journal of the European Union, L 335, 1–155. https://eur-lex.europa.eu/eli/dir/2009/138/oj
Walker, S. P. (2008). Accounting histories of women: Beyond recovery? Accounting, Auditing & Accountability Journal, 21(4), 580–610.
Walton, P., Tan, C., & Yousuf, M. (2020). The economics of IFRS 17: Measurement, profit emergence and disclosure (Professional monograph).
Whittington, G. (2008). Fair value and the IASB/FASB conceptual framework project: An alternative view. Abacus, 44(2), 139–168.
Windsor, P., Yong, J., & Bell, M. C. T. (2020). Accounting standards and insurer solvency assessment. IMF Working Paper WP/20/146.
World Bank – Centre for Financial Reporting Reform. (2019). Albania: Report on the Observance of Standards and Codes (ROSC) - Accounting and auditing. https://cfrr.worldbank.org/sites/default/files/2020-02/P169348%20Albania%20ROSC%20AA%20-20Final%20for%20publication%20ENG%20(clean%20-%20SECO).pdf
Zeghal, D., & Mhedhbi, K. (2006). An analysis of the factors affecting the adoption of international accounting standards by developing countries. The International Journal of Accounting, 41(4), 373–386.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Esmeralda Yryku, Diana Lamani
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
