Deloitte tasks insurers on global standards in financial reporting
In bid to set-up a global standards process in financial results-based approach for the nation’s insurance industry, Deloitte has urged the sector regulators and operators to get ready for the implementation of IFRS 17 by year 2021.
This was the fulcrum of deliberations at a breakfast meeting with underwriting companies across the country titled: “Practical insight into the impact of IFRS 17 standard (Insurance Contracts) on insurance business in Nigeria” organised by Deloitte, in Lagos.
According to the company, IFRS 17 previously known as IFRS 4 PhaseII is an International Financial Reporting Standard developed by the International Accounting Standards Board (IASB), providing new standards for reporting profit from insurance contracts, which would come into effect from 2021.
The main objective is to standardise insurance accounting globally to help users of the accounts make sensible comparisons between companies, their past performance, their current financial position and risk exposure.For the first time, there will be a single IFRS accounting model for all types of insurance contracts that will be transparent and aligned to general IFRS accounting of other industries.
IFRS 17 is the standard that will cover the methods for calculating the liabilities for insurance contracts and the resulting new profit recognition pattern for these contracts.The implications of this IFRS transformation initiatives are not just technical calculation, but will affect, among others, Actuarial (reserving), Finance (general ledger, reporting processes), Tax (treatment), IT (data storage, finance systems), HR (remuneration) and Investor Relations (presentations).
The South Africa-based Manager, Actuarial and Insurance Solutions, Deloitte, Previn Pillay, who spoke to The Guardian on the objective of IFRS 17 to the insurance operators in Nigeria said the new standard is to ensure that underwriters provide relevant information that faithfully represents insurance contracts.
Pillay noted that this will allow users of the financials to assess the impact that insurance contracts have on the financial position, financial performance and cash flows.On doing this, IFRS will create standards for insurers and other entities to identify insurance contracts that fall within the scope of the standard.
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