Operators in Nigeria’s insurance industry Monday convened for an indepth study of the International Financial Reporting Standard (IFRS) 17 which compels every insurance contract and financial accounts to be prepared in accordance with its rule from January 1, 2023.
At the meeting of the industry that held at the instance of the National Insurance Commission (NAICOM), the Insurance Industry Working Group (IIFRWG), an initiative of the regulator that was inaugurated 2nd March 2020 was subdivided into three sub-groups for easy coordination.
The three critical sub-working groups are, the Accounting, Disclosure, and Reporting Sub-Working Group which will assist on technical issues relating to accounting; the second is the Technical, Actuarial, Data Governance, Process and Systems Sub-Working Group which will deal on technical issues relating to actuarial, data and IT; and the Policy and Methodology Sub-Working Group which will interpret requirements and draft methodologies and policies.
Each of the SWG is provided with detailed terms of reference for while the members are from the IIFRWG and those co-opted from the relevant organizations.
Membership of each of the SWG is selected based on a member’s area of strength in terms of knowledge and experience to contribute meaningfully to the achievement of the assignment of the SWG. The aim is to ensure that the views from Nigerian stakeholders interested in insurance financial reporting issues are properly considered in discussions at SWG.
Speaking during the inauguration, the Commissioner for Insurance, Sunday Thomas said the initiative is in line with the Commission’s strategic goal, as the IFRS 17 will facilitate transparency and accountability in financial reporting.
“The Insurance Industry Working Group (IIFRWG) which is an initiative of the Commission which was inaugurated at this same venue on 2nd of March 2020 as an advisory and consultative team of experts for the purpose of seamless adoption of IFRS 17 in Nigeria.
“This initiative is in line with the Commission’s strategic goal as IFRS 17 will facilitate transparency and accountability in financial reporting.
“On this note, I am glad to state that the Working Group has performed creditably well and we appreciate all the members for their selfless service to the Nigerian insurance industry in this journey to IFRS 17.
“We all know that in May 2017 the International Accounting Standard Board (IASB) issued the International Financial Reporting Standard 17 (IFRS 17) Insurance Contract which will replace the present IFRS 4 on accounting for insurance contracts with an effective date of January 01, 2023,” Thomas said.
He said further that all insurance and reinsurance contracts must be reported in accordance with IFRS17.
“Beginning from January 01, 2023, all insurance and reinsurance contracts must be reported in accordance with IFRS 17 whose objective is to ensure that an entity provides relevant information that faithfully represents the insurance contracts.
“Ths 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.
“If the effective date of application is not shifted further by the IASB, it, therefore, means that Nigeria’s insurance industry has less than two (2) years to prepare for the adoption of IFRS 17.
“It is against this backdrop that the Commission hereby constitutes a Sub Working Group that will help to foster the country’s adoption of the IFRS 17 in line with best practice,” Thomas added.
Cntinuing, he said that, “The Commission had equally issued a ‘Roadmap’ on Adoption of IFRS 17 Insurance Contract for Insurance Industry in Nigeria on January 28, 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.
“In addition to the inauguration of the IIFRWG and issuance of the Roadmap, the Commission had also organized an IFRS awareness training on IFRS 17 for CEOs, Non- Executive Directors, and Accountants of insurance and Re-insurance companies in Nigeria. The two days awareness training session was an equally huge success.
“It is now in furtherance to providing technical recommendations and production of relevant guidance for the implementation of IFRS 17 that members of the IIFRWG are now grouped into SWG that we are today inaugurating.”
The Sub Working Groups are constituted to assist the IIFRWG in the achievement of its mandates by considering those more technical aspects in the implementation of IFRS 17 and that will support the seamless transition.