Financial Reporting Transparency in the Insurance Sector: Legal Disclosure Obligations, Consumer Trust, and Business Sustainability

Abstract

Financial reporting transparency has emerged as a critical mechanism for addressing information asymmetry, strengthening market discipline, and enhancing trust in regulated financial sectors, particularly insurance. The study examines the role of financial reporting transparency in the insurance sector by integrating disclosure theory, legal enforcement frameworks, consumer trust literature, and sustainability perspectives. Drawing on a comprehensive narrative review of accounting, legal, and insurance scholarship, the paper analyses how transparent financial reporting improves market efficiency, supports solvency regulation, and facilitates effective regulatory oversight. The analysis further highlights the importance of enforcement mechanisms, institutional quality, and standardized disclosure regimes in ensuring that transparency objectives are realized in practice. Special attention is given to the behavioral dimensions of transparency, including information overload and trust formation, which influence policyholder decision-making in complex insurance markets. The study also explores the implications of evolving accounting standards, particularly International Financial Reporting Standard 17 (IFRS 17), for disclosure quality, pricing strategies, and long-term business sustainability. Overall, the findings suggest that financial reporting transparency functions not merely as a compliance requirement but as a strategic governance tool that reinforces consumer confidence, financial stability, and sustainable performance in the insurance sector. The paper concludes with policy and managerial implications for regulators and insurers seeking to enhance disclosure effectiveness in increasingly complex financial environments.