The National Insurance Commission, NAICOM, has charged insurance companies to develop business plan in preparation for transition to IFRS 17 before the implementation date of January 2022.
According to NAICOM the move is necessary as transition is going to be comprehensive and complex. It will be recalled that beginning from January 01, 2022, all insurance and reinsurance contracts must be reported in accordance with IFRS 17. Acting Commissioner for Insurance, Mr. Sunday Thomas stated this at the inauguration ceremony of the Insurance Industry Financial Reporting Working Group (IIFRWG) in Lagos yesterday.
Thomas said, “Developing business plan before the effective date will affect key areas in the operational processes, system reporting, management information, compensation plan, tax and a host of other key performance indicators.” He stated that in May 2017 the International Accounting Standard Board (IASB) issued the international Financial Reporting Standard 17 (IFRS 17) Insurance Contract. This standard will replace the present IFRS 4 on accounting for insurance contracts by January 01, 2022. He said, “This standard will have significant implications on Information Technology systems, strategic management, business processes, actuarial services, treasury and employee skills. In all of these, there are a lot of challenges that will be faced by the insurers. “If the effective date of implementation is not shifted again, it therefore means that Nigeria has only one year to prepare for the adoption of IFRS 17. It is against this backdrop that the Commission hereby constitutes a Working Group that will help to foster the country’s adoption of the IFRS 17 in line with best practice.”