The National Insurance Commission (NAICOM) has inaugurated the Insurance Industry Financial Reporting Working Group (IIFRWG) to develop guidelines that can be adopted by the Commission for effective implementation of IFRS 17 in the nation’s insurance industry.
IIFRWG headed by Bareneka Thompson, director, Inspectorate in NAICOM and made up of key stakeholders and development parterres from KPMG, PwC, EY, Bekoda, Chief Financial Officers of selected insurance Companies, actuarial experts from NAICOM and the Accounting Technical Committees of the Nigerian Insurance Association (NIA), were mandated to formulate a workable guideline of international best practice that could be comparable to other jurisdictions.
Implementation of IFRS 17 is expected to commence in Nigeria on 1st January 2022.
Sunday Thomas, acting commissioner for Insurance/CEO of NAICOM speaking at the inauguration ceremony in Lagos said IIFRWG is an advisory and consultative team being constituted by NAICOM for the purpose of seamless adoption of IFRS 17 in Nigeria.
Thomas said the role of the Group is to support the Commission in providing technical advice on the adoption of IFRS 17 Insurance Contract and IFRS Interpretations on insurance specific matters and their application within Nigeria.
“The Working Group will also provide specialized knowledge to enhance an understanding of insurance specific issues and technical assessment of proposals by advising and supporting the Commission/ Industry in the following areas”/
He said that the IFRS 17 Insurance contracts establish the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the Standard.
“The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial performance and cash flows.”
Thomas said that the standard will have significant implications on information technology systems, strategic management, business processes, actuarial services, and treasury and employee skills.
In all of these, there are a lot of challenges that will be faced by the insurers, stating that transition is going to be comprehensive and complex, but developing business plan before the effective date will be critical, he said..
In May 2017 the International Accounting Standard Board (IASB) issued the international Financial Reporting Standard 17 (IFRS 17) Insurance Contract. This standard will replace the present IFRS 4 on accounting for insurance contracts by January 01, 2022, therefore beginning from January 01, 2022, all insurance and reinsurance contracts must be reported in accordance with IFRS 17.
The Commission subsequently on January 28, 2020 issued the roadmap on Adoption of IFRS 17 Insurance Contract for Insurance Industry in Nigeria.
The activities and timelines in the Roadmap are intended to set the tone and facilitate a coordinated process and action steps. The Roadmap was issued for general adoption by all Insurance, Reinsurance, Takaful and Micro Insurance Companies in Nigeria. The Working Group should be guided by the roadmap in the execution of its mandates, the Commission stated.
