Deloitte has described the introduction of the International Financial Reporting Standard (IFRS 17) as one of the biggest recent changes to the insurance industry.
According to the professional services firm, this is not just true in Ghana, but across the continent and in many global insurance markets.
The IFRS 17 is the IASB’s financial reporting standard for insurance contracts.
In its 2024 Africa Insurance Outlook, Deloitte said the standard has had a massive impact on actuarial and finance processes, and data and technology systems in addition to requiring significant accounting policy changes.
“In response to the global implementation of IFRS 17, National Insurance Commission (NIC) has taken proactive steps to ensure that the country’s insurance sector remains compliant, competitive, and financially stable. When studied carefully, this new standard has one major goal: standardization”, the report disclosed.
Despite obvious implementation challenges, Deloitte said IFRS 17 is expected to improve the comparability of insurers’ financial reports.
Furthermore, the use of IFRS-based metrics as a primary consideration for regularity standards will have a favorable effect on overall financial stability.
It continued that in order to achieve the goal of comparability of financial performance reporting in the insurance sector, the IFRS 17 requires significant changes to the measurement models of the insurance accounting standards.
It mentioned that the Ghanaian regulator, just like many of their counterparts throughout the world, has responded to this shift in a number of ways to ensure that they continue to fulfil their regulatory mandate, despite the difficulties presented by the new standard.
The NIC released an implementation roadmap that included timelines for all streams from submission of vital policy documentation to audited financial statements fully compliant with IFRS 17.
To ease the burden, the Commission has considered a phased approach to implementation, allowing insurers to gradually adopt the new standard. This has reduced the impact of the operational changes needed to support the change.
The NIC has also developed reporting templates for the industry in their supporting manuals, the Illustrative IFRS 17 Financial Statement and Supervision Department Reporting (SDR) Templates.
These templates were issued to enable insurance industry players to report their IFRS 17 numbers per the requirement in the standard.
