Follow Us on Google
By Henry Uche, [email protected]
The West African Insurance Companies Association (WAICA) has taken steps to ensure that insurance companies in the sub-region commence harmonisation of International Financial Reporting Standard (IFRS) 17, to take the sector to enviable height.
Chief Executive Officer, Mettlehouse Consulting and ex-director, National Insurance Commission, Barineka Thompson, re-echoed this in a paper entitled: ’Harmonizing Financial Reporting in West Africa IFRS 17 Insurance Contract Implementation Guide for Operators and Regulators’ presented at the 2023 WAICA Education Conference in Freetown, Sierra Leone recently.
IFRS 17 is an International Financial Reporting Standard that was issued by the International Accounting Standards Board in May 2017. It will replace IFRS 4 on accounting for insurance contracts and took effect from January 1, 2023, though the original effective date was meant to be January 1, 2021.
Thompson noted that the implementation of IFRS 17 presents a great opportunity for all WAICA members (including Nigeria) to set the tone and as example to other regional blocks, with common cooperation and interest.
According to him, IFRS 17 heralds a new era of accounting for insurance contracts because it sets out principles-based requirements.
The impact of IFRS 17, he said, would be felt by many stakeholders, including, but not limited to preparers of financial statements, those charged with the governance of entities that issue insurance contracts, investors, regulators, analysts and auditors.
The insurance czar stated that IFRS 17 would improve the comparability of the measurement, recognition, presentation and disclosure of insurance contracts and over-all, the financial statements of member companies. He affirmed that with the reporting standard, work of the College of Insurance Supervisors (CIS) of the WAISA would be more efficient. “It is a great opportunity for WAICA members to develop and adopt uniform illustrative financial reporting (to provide minimum basis) a template for use by operators in the region.
“This can be achieved through policy adoption by the West African Insurance Supervisors Association(WAISA) under the West African Monetary Zone (WAMZ) protocol,” he maintained.
He enjoined WAICA member countries to quickly commence the harmonization of financial reporting, adding that the effective implementation of the standard is hinged on certain guiding principles.
“Let us embrace IFRS 17 principles; IFRS 17 provides principle-based requirement aimed at improving the comparability of measurement and presentation of insurance contract by insurance entities.
“High Quality Implementation: Management should ensure high quality implementation while avoiding undue complexities; consistent interpretation and application across groups and the standard introduces various accounting policy choices; hence, stakeholders must ensure consistent interpretation and application of the standard across group entities. All these would require robust governance over the entire implementation program.”
To ensure effective implementation of the standard, he said management of insurers must set up steering committees saddled with the responsibity of providing governance for the successful implementation of the standard and foster methodologies and solutions based on transparency and auditability.
“It will improve recognition, presentation and disclosure of insurance contracts and over-all, the financial statements of member companies. Regulators must show leadership and coordinate the industry with clearly detailed road map to achieve seamless implementation.”
He pointed out that some disparities obtained in insurance financial reporting models across the WAICA block are similar to other jurisdictions, however the birth and operation of WAISA is germane.
Recall that the National Insurance Commission (NAICOM) had earlier alerted underwriting firms in Nigeria to prepare for the adoption of IFRS 17 as the transition date approached. The Head of Corporate Communications and Market Development at NAICOM, ‘Rasaaq Salami, who spoke on behalf of the commission said, in other to ensure that operators comply with the new reporting model and get them ready for the challenges, the Commission had set up sub-working groups to facilitate the migration in the industry.
