Experts and industry regulators at the Deloitte IFRS 17 Breakfast Meeting, held in Lagos have disclosed that the insurance sector in Nigeria has a tendency to compete with its peers worldwide once the IFRS 17 is integrated, effective January 1, 2022.
The IFRS 17, which was previously set for 1 January, 2021, is an International Financial Reporting Standard that was issued by the International Accounting Standards Board in May, 2017. It is a replacement to the IFRS 4 Insurance Contracts and related interpretations.
In the words of Oduware Uwadiae, partner-in-charge of IFRS implementation, “It is going to have huge impact in the sense that currently when liabilities are being measured, they are measured based on events that occurred; But the new standard is looking forward. It is looking at the risk on the whole contract, to the last mile. The current standards will only look at the risk as at today, but the new standard is considering the risk from now till the end of the contract.”
He also also added that if a contract which is to expire in the next 6 years is signed today, the risk would be measured from now till the end of the 6 years and if the risk is increasing, additional losses on the instrument can be recouped.
The implementation of the IFRS 17 may be quite a challenge for insurance companies, thus extending the launch date by one year ( 2021-2022).
A Consultant at Deloitte Actuarial and Insurance Solutions, Giles Waugh, said that the implementation of the IFRS 17 wont be a flick, but a journey that would require collaboration with the IT unit of firms.
One main objective of the IFRS 17 is to standardize insurance accounting globally to assist the users of accounts during comparisons between companies.
Also, IFRS 17 unifies the accounting model for insurance contracts that will be clear and lined up with general IFRS accounting of other countries worldwide.