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Chuks Udo Okonta
As stakeholders in the insurance industry await commencement of International Financial Reporting Standard (IFRS) 17, by June 2023, the National Insurance Commission (NAICOM) has tasked shareholders to educate themselves so that they can effectively monitor financial positions of their companies.
Commissioner for Insurance Sunday Thomas, said this yesterday, when members of Independent Shareholders Association of Nigeria (ISAN) visited the Commission in Abuja.
Thomas told the shareholders that IFRS 17, would change how insurance companies present and report their financial statements. He urged the shareholders to consult their companies on how they could be trained on the new reporting standard.
He noted that with the adoption of IFRS 17, financial statements of insurance companies would no longer carry gross premium, though the balance sheet will remain the same.
The Insurance Industry regulator, who was excited by the visit, told the shareholders that NAICOM needs a robust relationship with them so as to effectively regulated the industry.
He submitted that NAICOM is committed to protection of all stakeholders – policyholders; shareholders and residual owners.
Responding to the shareholders demand for better value of their shares at the Nigerian Exchange, Thomas said investors in insurance sector need to be very patient so as to maximize their profits, adding that there is beautiful future for the sector.
He also told the shareholders that insurance companies, do comply with the local content policy, adding that companies only cede abroad risks they do not have the capacity to underwrite.
“Shareholders need to be educated on how they insurance industry works and the capital market by way of looking beyond the financials,” he posited.
Thomas told the shareholders to hold members of board of their companies responsible for most problems suffered by their companies, stressing that as investors, they should be interested on how their investments are managed.
The Commissioner urged the shareholders to promote corporate governance by ensuring competent individuals are elected as board members of their companies.
He implored them to take responsibility of internal evaluation of board reports and comport themselves during annual general meetings.
He charged shareholders elected to internal audit committee to exercise their duties and ensure quality control.
National Coordinator Independent Shareholders Association of Nigeria, Moses Igbrude, applauded NAICOM for the meeting, whilst seeking for involvement of shareholders in major decisions taking on companies.
He expressed misgivings on how some foreign firms were allowed to take over 100 stakes in some companies without the involvement of minority shareholders.
He implored NAICOM to work together insurance practitioners to promote insurance education, stressing that most Nigerians don’t buy insurance due to wrong perception arising from low awareness.
IFRS 17 Insurance Contracts.
IFRS 17 Insurance Contracts establishes 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.
An entity shall consider its substantive rights and obligations, whether they
arise from a contract, law or regulation, when applying IFRS 17.
A contract is an agreement between two or more parties that creates enforceable rights and obligations.
Enforceability of the rights and obligations in a contract is a matter of law. Contracts can be written, oral or implied by an entity’s customary business practices.
Contractual terms include all terms in a
contract, explicit or implied, but an entity shall disregard terms that have no
commercial substance (ie no discernible effect on the economics of the contract). Implied terms in a contract include those imposed by law or regulation.
The practices and processes for establishing contracts with customers vary across legal jurisdictions, industries and entities. In addition, they may vary within an entity (for example, they may depend on the class of
customer or the nature of the promised goods or services)
