Insurers could change the way they sell insurance policies in future as a result of an overhaul in the way financial accounts are reported.

The second phase of a project, being carried out by the International Accounting Standards Board (IASB), could impact on the length of policies being offered to customers.

According to Neil Coulson, partner with accounting firm CLB Littlejohn Frazer, the development of an International Financial Reporting Standard (IFRS) on accounting for insurance companies, could lead to policies being issued on a multi-year basis, or on a short-term arrangement, such as one month at a time.

He said: "If you can realise profit early then insurers may write longer contracts, but if the recovering process looks to be penal then they may keep them short."

The final stage of the IFRS project is not expected to be completed until 2009.

Jamie MacDiarmid, finance director of Hardy Underwriting, said it was too early to tell what the new standard's impact would be.

But he added: "The main issue is going to be what the client and the customer wants and I cannot imagine that an insurer issuing a one month contract will be of much interest to clients at all."