Kindly leave a comment and share
Chuks Udo Okonta
The National Insurance Commission (NAICOM) in collaboration with the Nigerian Insurers Association (NIA) Accounting Technical Committee (ATC) are charting ways on how to ensure IFRS 17 is implemented effectively.
At a one-day interactive session with key stakeholders on IFRS 17 implementation held recently at NEM Insurance Plc Auditorium, which was attended by NAICOM officials, the Nigerian Actuarial Society (NAS), Finance personnel of insurance companies under the umbrella body of Accounting Technical Committee (ATC) of NIA, external auditors, actuaries, and industry consultants, the experts discussed and aligned on key areas of the new IFRS 17 standard for a smooth transition and financial reporting.
In his welcome address, the Commissioner for Insurance (CFI), Olorundare Sunday Thomas appreciated the organizer for the initiatives particularly at a period when the industry is gearing up towards the submission of IFRS 17 compliant audited financial statement to the regulator. He applauded the supportive role-played by Nigeria Actuarial Society (NAS) audit firms and other consultants on financial reporting value chain.
The Director-General of NIA, Mrs. Yetunde Ilori, in her speech, emphasized the importance of collaboration among industry stakeholders most especially at this critical time of implementation of the new standard. She appreciated and encouraged NAICOM to continue in its quest to deepening knowledge, and cooperation with the insurance industry in the overall interest of growth and development.
In his welcome address, the Chairman of the Accounting Technical Committee (ATC) of the NIA, Dr. Emmanuel Otitolaiye who is also the Chief Financial Officer at Linkage Assurance Plc, appreciated NAICOM for its unwavering supports to the industry particularly in the areas of providing guidance and encouraging industry-regulator interactions towards effective implementation of the standard. Dr. Otitolaiye also appreciated the NAS, external auditors and other participants for the cooperation and understanding which the industry needs to progress.
The Director, Supervision Directorate, NAICOM, Mrs. Oluwatoyin Charles who presented a paper titled “Navigating the Path to IFRS 17: Transforming Insurance Reporting and Accountability” reaffirmed the Commission’s commitment to facilitating a smooth transition and implementation of the IFRS 17 standard. Mrs. Oluwatoyin said that IFRS 17 is a landmark standard that requires enhanced system architecture and data management. She further stressed that IFRS 17 is a significant accounting standard for insurance contracts that aims to provide more transparent and consistent financial reporting for insurance companies.
“The adoption of IFRS 17 represents a paradigm shift in the accounting standards for insurance contracts, and its implementation has presented the industry with formidable challenges, particularly in relation to the system architecture and data management.
The introduction of IFRS 17 has fundamentally transformed the way insurance contracts are accounted for, recognized, measured, presented, and disclosed, introducing a principles-based approach that aims to improve transparency, comparability, and consistency in financial reporting.
IFRS 17 represents a monumental shift in the landscape of insurance accounting, with its emphasis on providing a comprehensive framework for insurance contract measurement, presentation, and disclosure, IFRS 17 stands as a testament to our unwavering dedication to build trust, instil confidence, and foster sustainable growth in the global insurance sector.
The journey toward IFRS 17 has been characterized by diligent collaboration, rigorous analysis, and a steadfast dedication to excellence.
The adoption of IFRS 17 necessitates a comprehensive re-evaluation of our accounting practices, requiring us to navigate a path guided by precision, adaptability, and strategic vision.
This transformative process compels us to converge data, technology, and expertise to foster a culture of continuous improvement, operational efficiency, and informed decision-making. Furthermore, the implementation of IFRS 17 serves as a catalyst for advancing the role of actuaries, accountants, and finance professionals in shaping the future of insurance reporting. It presents an opportunity for us to leverage our collective expertise to drive substantive change, elevate industry standards, and unlock new dimensions of insight and value creation.
In parallel, the advent of IFRS 17 underscores the imperative of cultivating a robust dialogue on the implications, challenges, and best practices associated with this standard. It beckons us to engage in strategic discourse, knowledge sharing, and collaborative endeavours to enable a seamless transition and optimize the potential benefits of IFRS 17 for our organizations and the industry at large.”
She however noted the challenges that come with the implementation of IFRS 17 standard for insurers including data management, system upgrades, and changes to actuarial and accounting processes.
“In essence, the evolving landscape of insurance reporting embodied by IFRS 17 compels us to embrace innovation, resilience, and a steadfast commitment to excellence. It beckons us to embark on a transformative journey marked by collaboration, adaptability, and strategic foresight, endeavouring to uphold the highest standards of integrity, accountability, and value creation in the realm of insurance accounting,” Oluwatoyin added.
The Nigerian Actuarial Society, through the IFRS 17 NAS NAICOM Discount Rate Committee, delivered a keynote presentation on Discount rate as part of its role in providing risk-free curve for the Nigerian market.
The presentation, anchored by Mrs. Yeside Kazeem (President, NAS) and Nnamdi Odozi, discussed the use of the yield curve by the insurance market.
According to the Committee, there are a number of possible approaches to the creation of monthly rates and each one has different implications.
For example, monthly rates could be created from either spot rate or forward rates. The methodology could be stepped, interpolated or cubic spline approach.
The Committee charged insurance companies to make use of monthly rates published on the NAS website on behalf of NAICOM.
The interactive session was facilitated by Olumuyiwa Adebayo, the Managing Consultant, FinPolNomics Green Finance Professional Services. The presentation was titled “Harmonizing Efforts in IFRS 17 Implementation: A Multifaceted Approach to Insurance Service Expenses, Risk Adjustments, Discount Rate, and Collaborative Industry Roles”.
Adebayo delved extensively into Insurance and reinsurance contracts under IFRS 17 with emphasis on recognition, measurement, presentation, and disclosure. He noted that the aim of the International Accounting Standards Board (IASB) for IFRS 17 is to bring increased transparency in financial information reported by insurance companies, consistency in the accounting for all insurance contracts, and adequate and reliable financial information about obligations, risks and performance of insurance contracts.
“IFRS 17 is the first truly international, comprehensive accounting Standard for insurance, replacing IFRS 4 – an interim Standard that results in widely divergent practices,” he said.
Dr. Otitolaiye, in his closing remark, said NIA will continue to engage stakeholders in an effort to bring harmonization of key areas of IFRS 17 toward the implementation of the standard.
