IFRS 9: NAICOM Says No Significant Loss On Insurers

……Gets NSE,SEC approval on Account Submission Extension, April

Subsequent to a rigorous Study and review on the International Financial Reporting Standards (IFRS) 9, the National Insurance Commission has revealed that Insurers will not suffer any significant loss following the implementation of the IFRS 9.

The Commission has received the approval of its sister regulators, Security and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) for the extension of underwriter’s financial account submission to be at the end of April 2019 as against the month of  March previously stated.

At an Interactive session with newsmen on Tuesday in Lagos, The Deputy Commissioner for Insurance, Technical, Sunday Thomas, stated that guidelines of the IFRS 9 has been sent to the market for better assimilation, views and opinions of underwriters.

For proper implementation of the IFRS 9, he revealed that the commission engaged the Chief Financial Officers (CFO) of each companies in an interactive session to ascertain how far they have implemented the standard and share challenges encountered, he added that each company gave a presentation of implementation from its company.

According to Thompson, IFRS 9 came into the system as a part of transparency in financial transaction adding that provides improved information because it introduces a structured approach to the classification and measurement of financial assets that reflects the business model in which they are managed and their cash flow characteristics.

On migration from IFRS 4 to IFRS 9, he said “We have tried our best as a commission to make it a lot easier for the market, our doors are opened for enquiries.”

“We are redefining our system for enhanced efficiency, we believe that there is nothing that is static as to meet the challenges of the market, we look at our system and move what ought to be moved, we also put things in their proper places.”

On the impending IFRS 17, Thompson said, “we are learning from the gaps that are in existence, by the time we come to the adoption of IFRS 17 which has given us longer period for adoption, 2022, we would have been able to perfect all the act so there will be a seamless flow.”

Also speaking, Director, Inspectorate, NAICOM, Barineka Thompson, expatiated on the effect of IFRS 9 on Insurance companies, he said ” the impact of IFRS 9 is mostly felt and will be felt by banks whose portfolio are predominantly debt portfolio or debt instruments, we are not expecting significant or negative impact on the insurers because if you go through the book of insurance companies you will see that the investments that is related to debt nature are mostly in company instruments, Government bonds etc, so its not like they are given personal loans to individual or corporate bodies which is the job or transaction of banks.

“It is not that we are saying that there was no form of impact or loss by the reason of classification and measurement modelling, what we are saying is that they are insignificant.”

On the financial account submission date extension, he explain that the insurance companies should be given more time because the insurance business and accounting are peculiar, that is why it has taken the IASB over 15 years to come out with an accounting system or model for insurance.

“We have to take time to make sure we understand what it really means and how to implement. Decision process and points and number of things we need to pit in place are not things expected of people in other sectors, no other sector is so expected in financial system and that is why IAS thought it wise to bring those options so the insurance companies will take time to ensure its well implemented” he said.

He insisted that the IFRS is not made, originated or facilitated by NAICOM as it isn’t made for insurance companies alone but for all financial parastatals.

He added that NAICOM is only rendering a helping hand for the same of financial reporting.

“The commission on Monday, approved the 2018 accounts of four insurance companies which complied with the IFRS 9 guidelines.” he said