The National Insurance Commission (NAICOM) is working ahead to bridge transition challenges that will confront insurance companies in the transition to IFRS 17 due for implementation in 2023.
IFRS 17 transforms the accounting processes for insurers across 100 countries, and applies a new set of standards, calculations, and criteria to insurers’ financial reporting.
Insurers across the continent are preparing to transition from current insurance accounting frameworks to IFRS 17. Insurers have a short timeframe to start their parallel runs and present their opening balance sheets on the new reporting basis. There are implementation challenges in preparing for the transition, and insurers need to review their strategies to ensure they can adapt to these challenges.
To this end, NAICOM has inaugurated the Sub Working Groups (SWGS) of the Insurance Industry Financial Reporting Working Group (IIFRWG).
Sunday Thomas, commissioner for Insurance who inaugurated the group in Lagos said that the SWG was expected to provide guidance to the IIFRWG for the seamless adoption of the International Financial Reporting Standard IFRS 17.
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He said the IFRS 17 would take effect from January 2023 by the Nigerian insurance companies.
Thomas said that the SWG was constituted to help foster the country’s adoption of the IFRS 17 in line with best practice.
The commissioner noted that the Commission had equally issued a ‘roadmap’ on the adoption of the IFRS 17 insurance contract for insurance industry in Nigeria since January 2020.
“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,” he said.
The commissioner said that the SWGS were constituted to assist the IIFRWG in the achievement of its mandate and ensure seamless transition to the IFRS 17. He said that the IIFRWG had identified the following three critical sub working groups namely : accounting, disclosure and reporting Sub -Working Group. This, he said, would assist on technical issues relating to accounting.
According to the Commissioner, members of the various SWGS comprises of selected members of the IIFRWG and the co-opted members selected from the relevant organisations.
He explained that membership of each of the SWG was selected based on a member area of strength in terms of knowledge and experience. Thomas noted that the aim of constituting the group was to ensure that the views from Nigerian stakeholders interested in insurance financial reporting issues were properly considered in discussions at the SWG. Thomas assured that the commission would continue to give its full support to the SWGS to achieved the set goals.
IIFRWG which was an initiative of the commission was inaugurated in March 2020 as an advisory and consultative team of experts for the purpose of seamless adoption of the IFRS 17 in Nigeria. The initiative was in line with the commission’s strategic goal to facilitate transparency and accountability in financial reporting. In May 2017, the International Accounting Standard Board issued the IFRS 17 insurance contract, which would replace the present IFRS 4 on accounting for insurance contracts effective January 2023.
The objective was to ensure that an entity provides relevant information that faithfully represents the insurance contracts. This information forms the 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.
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