Lagos, Oct. 10, 2023 : AIICO Insurance Plc says it has commenced the full implementation of the International Financial Reporting Standards 17 (IFRS 17) in its 2023 financials, as directed by the National Insurance Commission (NAICOM), effective from Jan. 1.
The IFRS 17 Project Manager of AIICO Insurance, Mr Mayowa Korode, made this known during a training session organised for journalists covering the insurance sector in Lagos.
“AIICO Insurance is fully ready for the implementation and the company’s first and second quarters 2023 reports were done in IFRS 17 model.
“The most fundamental element of change that IFRS 17 brought to the financials, is the closer alignment of the accounting to the underlying economics of insurance.
“IFRS 17 is a comprehensive standard to account for insurance contracts applicable to companies that prepare financial statements under IFRS.
“It replaces IFRS 4, which was not a comprehensive standard. The new standard provides a single global accounting standard for insurance contracts,” he said.
According to him, the IFRS 17 was developed to bring consistency to financial reporting around the globe for companies reporting under IFRS.
The manager said it facilitates better comparison between insurance companies and other sectors of the economy.
Korode also said that IFRS 4 has a variety of treatments, depending on the type of contract and company.
He noted, “IFRS 4 estimates for long-duration contracts which are not updated, discount rate based on estimates does not reflect economic risks, it lack discounting for measurement of some contracts and little information on economic value of embedded options and guarantees”
The project manager explained that the IFRS 17 provides consistent accounting for all insurance contracts by all companies, estimates update to reflect current market-based information, while discount rate reflects characteristics of the cash flows of the contract.
According to him, the measurement of insurance contract under IFRS 17, reflects time value where significant and measurement reflects information about full range of possible outcomes.
Korode stated that the balance sheet in IFRS 17 requires a current measurement model, where estimates are re-measured in each reporting period.
He said, “under IFRS 17, entities have an accounting policy choice to recognise the impact of changes in discount rates in profit or loss or in other comprehensive income (‘OCI’) to reduce some volatility in profit or loss.
“IFRS 17 disclosures will be more detailed than required under current reporting frameworks; disclosures will provide additional insight into key judgements and profit emergence.