The National Insurance Commission, NAICOM, is expediting reforms in the insurance industry to make it adapt to global standards and compete effectively.
To achieve this the Commission, has inaugurated the Sub Working Groups, SWG, of the Insurance Industry Financial Reporting Working Group, IIFRWG.
The Sub Working Groups (SWGs) would be providing assistance to the Insurance Industry Financial Reporting Working Group (llFRW) and guidance for seamless adoption of the International Financial Reporting Standard, IFRS 17 expected to take effect on 1st January, 2023 by the Nigerian insurance companies.
Inaugurating the Groups in Lagos, Nigeria’s Commissioner for Insurance, Sunday Thomas, recalled that the Insurance Industry Working Group (llFRWG) which is an initiative of the Commission was inaugurated on 2nd of March 2020 as an advisory and consultative team of experts for the purpose of seamless adoption of IFRS 17 in Nigeria.
Thomas, explained that the initiative was in line with the Commission’s strategic goal as IFRS 17 will facilitate transparency and accountability in financial reporting.
He applauded the Working Group for excellent performance and selfless service to the Nigerian insurance industry in the journey to IFRS 17.
The Commissioner reminded them that in May 2017 the International Accounting Standard Board (IASB) issued the international Financial Reporting Standard 17 (IFRS 17) Insurance Contract which will replace the present IFRS 4 on accounting for insurance contracts with an effective date of January 01, 2023.
Thus, beginning from January 01, 2023, all insurance and reinsurance contracts must be reported in accordance with IFRS 17 whose objective is to ensure that relevant information provided by firms faithfully represents the insurance contracts, he said.
This information, he further explained forms the 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.
The Commissioner however, noted that if the effective date of application is not shifted further by the IASB, it therefore means that Nigeria insurance industry has less than two years to prepare for the adoption of IFRS 17.
“It is against this backdrop that the Commission hereby constitutes a Sub Working Group that will help to foster the country’s adoption of the IFRS 17 in line best practice” said Thomas.
The Commission had equally issued a “Roadmap” on Adoption of IFRS 17 Insurance Contract for Insurance Industry in Nigeria” on January 28, 2020. The activities and timelines in the Roadmap are intended to set the tone and facilitate a coordinated process and action steps.
The Roadmap was issued for general adoption by all Insurance, Reinsurance, Takaful and Micro Insurance Companies in Nigeria.
In addition to the inauguration of the llFRWG and issuance of the Roadmap, the Commission had organized an IFRS awareness training on IFRS 17 for CEOs,
Non-Executive Directors and Accountants of insurance and Re-insurance companies in Nigeria. The two days awareness training session was equally a huge success.
“It is now in furtherance to providing technical recommendations and production of relevant guidance for the implementation of IFRS 17 that members of the IIFRWG is now grouped into SWG that we are today inaugurating., he said.
The Sub Working Groups are constituted to assist the IIFRWG in the achievement of it mandates by considering those technical aspects in the implementation of IFRS 17 and that will support in the seamless transition.
The llFRWG has three critical sub working groups which include, Accounting, Disclosure and Reporting Sub-Working Group, to assist on technical issues relating accounting, Technical, Actuarial, Data Governance, Process and Systems Sub-Working Group – to assist on technical issues relating to actuarial, data and IT as well as Policy and Methodology Sub-Working Group to interpret requirements and draft methodologies and policies
Members of the various SWGs comprises some selected members of the IIFRWG and the co-opted members selected from the various organisations while membership of each of the SWG is selected based on a member area of strength in terms of knowledge and experience to contribute meaningfully to the achievement of the assignment of the SWG.
The aim is to ensure that the views from stakeholders interested in insurance financial reporting issues are properly considered in discussions at SWG, Thomas stated.
He reinstated that the Sub Working Group is advisory in nature and thus the Sub Working Group’s output will always take the form of recommendation to the IIFRWG for further consideration.
He assured that the Commission will continue to give its full support to the Sub Working Groups to facilitate their smooth working and in achieving the set goals.