Three of the UK’s leading insurers have lobbied government to block the International Accounting Standards Board’s (IASB) new insurance standard, IFRS 17.

According to documents released to IPE under the Freedom of Information Act, Aviva, Legal & General (L&G) and Prudential described the new IFRS as “the answer to the question nobody has asked”.

In a letter dated 14 July and addressed to the Chancellor of the Exchequer, Philip Hammond, the trio warned the standard would cost “billions” to implement and “add risk to the UK during Brexit”.

The IASB hoped IFRS 17 would enhance financial stability by forcing insurers to apply a common global accounting model for their liabilities at a time when they face growing pressure from record-low interest rates. In the case of UK insurers such as Aviva, L&G and Prudential, their liabilities include those transferred from defined benefit schemes through buy-in or buyout transactions.

IFRS currently lacks an insurance liability accounting model and effectively tells insurers to calculate their liabilities using local accounting rules. In their letter, the insurers called for local rules to be retained.

News of the insurers’ lobbying comes as civil servants race to develop a new UK-only endorsement mechanism for the IASB’s standards after the UK quits the EU.

Meanwhile, separate HM Treasury (HMT) minutes also showed that, in meetings with officials this summer, the insurers argued the new standard would cost as much as Solvency II to implement but for little tangible benefit. Legal & General’s team told Treasury officials IFRS 17 was likely to cost around £200m (€224m) to implement.

Aviva said the “radical” proposal would need a “significant period of testing”. L&G said a year-long period of testing was likely required “to identify and iron out the problems”.

The Treasury appeared to be taking the insurers’ concerns seriously. A record of a meeting on 15 August between HMT and Prudential noted that a Treasury official advised the Prudential that “the case against IFRS 17 would be strengthened if accompanied by a more detailed evidence base”.

The comment is the strongest hint yet that Brexit could derail IFRS 17. The European Commission has yet to endorse the standard.

In their 14 July letter to the Chancellor, the insurers wrote: “[T]he UK’s exit from the European Union has provided us with an opportunity to retain the existing rules which are appropriate for the UK insurance industry.”

Another minute from HMT hinted that the IASB could fail in its decade-long effort to converge accounting for insurance liabilities, with none of the world’s major economies tipped to adopt IFRS 17.

The minute said: “The US, China, Japan and many other countries were unlikely to adopt [it], therefore, UK companies, which would be saddled with the costs of implementation, would be at a competitive disadvantage.”

The question mark over IFRS 17 parallels the concern among pensions experts over the impact of the IASB’s IFRIC 14 project.

The IASB voted last month to pause the project, which could force defined benefit scheme sponsors to recognise massive additional balance-sheet liabilities.

BEIS, the government department currently responsible for IFRS-related issues, has delayed the release of documents related to IFRIC 14, citing the public interest.

Lane Clark & Peacock partner Tim Marklew told IPE that Brexit could mean regulators would step in and carve out the changes.

He said: “I believe that were the IASB to get IFRIC 14 wrong and render it unworkable for UK companies.

“I can see quite a bit of pressure on UK regulators after Brexit to sort the problem out and level what is starting to look like a very uneven playing field for UK companies.”