IFRS 17 implementation lessons seen strengthening insurance industry compliance

The nation’s insurance industry has learned valuable lessons from the implementation of International Financial Reporting Standard (IFRS) 17 and its efforts to meet regulatory deadlines.

These insights have become crucial in strengthening the foundation for improved compliance, which not only reduces regulatory infringements and fines but also ensures alignment with global standards.

This outcome was highlighted at the Annual Financial Reporting Meeting, a one-day session attended by Chief Financial Officers (CFOs) of insurance companies, officials from the National Insurance Commission (NAICOM), and members of the Accounting Technical Committees of the Nigerian Insurers Association (NIA), held in Lagos.

Emmanuel Otitolaiye, Chairman of the Accounting Technical Committee of NIA, emphasised the importance of continuous collaboration among stakeholders, as a key strategy for maintaining regulatory compliance and preventing infringements that often lead to penalties.

He acknowledged the National Insurance Commission for its steady support, providing guidance and fostering open communication with the industry to enhance the understanding of regulatory requirements.

Oluwatoyin Charles, Director of Supervision at NAICOM, reiterated the Commission’s commitment to fostering a strong and stable insurance industry.

She expressed the Commission’s satisfaction with the annual joint meeting, particularly the post-implementation review of IFRS 17 on “Insurance Contracts.” She pointed out that the implementation of this standard has significantly transformed the accounting for insurance contracts.

“As we gather to exchange experiences and insights, we recognize the profound impact of IFRS 17 in revolutionising the way insurance contracts are accounted for.

“The process has been a major undertaking for insurers and stakeholders, and today, we will reflect on the lessons learned, the challenges overcome, and the opportunities for further improvements in financial reporting and disclosure”, she said.

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However, Charles also acknowledged that despite the progress made, challenges remain. She identified areas that still require improvement, emphasising that the Commission’s efforts are focused on refining these aspects to ensure the continued enhancement of financial reporting practices across the industry.

“We must work together to ensure that our financial reports align with the requirements of IFRS,” Charles added. “This will improve consistency and comparability, ultimately helping us attract foreign investors”, she added.

Cyprian Amadi, Deputy Director of Supervision at NAICOM, discussed the post-implementation phase of IFRS 17, identifying common errors observed in the 2023 Audited Financial Statements (AFS).

He urged insurers to invest in robust IFRS 17-compliant systems and strengthen their governance frameworks, warning that a manual approach to preparing financial statements is no longer sustainable.

Amadi also encouraged insurers to adopt the illustrative templates developed by NAICOM in collaboration with the four big audit firms (PwC, KPMG, EY, and Deloitte).

“Following the presentation and disclosure requirements in these templates would help insurers produce high-quality financial statements that will stand the test of time, Amadi said.

Kabiru Jemaku, Director of the Directorate of Accounting Standards – Private Sector at the Financial Reporting Council of Nigeria (FRCN), delved into compliance issues concerning financial reporting in the insurance sector.

He addressed concerns related to actuarial reserves and the knowledge gap in implementing the IFRS 17 standard.

Jemaku reiterated the FRCN’s commitment to bridging this knowledge gap by providing targeted training and capacity-building initiatives aimed at supporting the insurance industry in enhancing its compliance with the new standards.