Mr. O.S. Thomas, Deputy Commissioner (Technical), National Insurance Commission (NAICOM) says the adoption and effective implementation of the International Financial Reporting Standards (IFRS 9) will ultimately enhance transparency in financial transactions in the insurance industry in Nigeria.
Thomas said in Lagos that the Commission has already issued a guideline on IFRS 9 to operators in the insurance market and is waiting for their feedback on the measure. He added that NAICOM also had one-on-one dialogue with operators as well as engaging the Chief Financial Officers (CFOs) in the sector in terms of implementation of the financial model.
The NAICOM Deputy Commissioner said: “Operators need to do more to incorporate the tenets of IFRS 9 into their annual financial returns. And because of late adoption of the measure, we have reached out to The Nigerian Stock Exchange (NSE) and Securities & Exchange Commission (SEC) for one month extension on behalf of quoted insurance companies in terms of financial fillings to avoid fines.”
He listed the role of insurance operators in the implementation of IFRS 9 to include:
- Awareness training for senior management and members of the board of directors
- Develop roadmap for adoption and follow-up action
- Develop policies, procedures and governance structure for implementation
- Perform an impact assessment to determine the high level implications of applying the new C&M requirements, including potential accounting mismatches and resulting volatility of IFRS 9 and 17
- Carry out predominance test and present result to the board of directors for decision on choice of option
- Develop, test, apply and validate new impairment model based on expected credit losses rather than incurred losses
- Appraise new hedge accounting criteria, expected to be of limited interest to insurers. 8. Address organisational responsibilities aligning actuaries, risk and accounting Identify shared risk and actuarial data Conduct parallel testing and pilot phases for increased efficiency
- IT architecture and infrastructure harmonization for valuations and impairment calculations
- File relevant report with the regulator for review and assessment