Should insurance be disclosed in corporate financial statements? An analysis of the views of stakeholders

Drawing on the institutional inaction literature and using interview material gleaned from a cross-section of United Kingdom (UK)-based 'sophisticated' stakeholder representatives, this study investigates the puzzle of why property-casualty insurance - a materially significant transaction for most companies - is not routinely disclosed in the annual financial statements of general industry companies. Analysis suggests that stakeholders vary in terms of their support for corporate insurance disclosure, with accounting academics and investors/financial analysts approving the idea. In contrast, other stakeholders, such as auditors, finance managers and regulators, are ambivalent, if not reticent, about the merits of publicly reporting the details of corporate insurance purchases. The study reasons that despite such divergent views, and lack of a collective consensus on the issue, the increasing risk exposure and costs of business interruptions arising from potentially insurable catastrophic events could move the public disclosure of corporate insurance up the international accounting standard-setting agenda.