Insurers to rely on experts as accounting rules loom

IFRS 17 was issued by the International Accounting Standard Board (IASB) on May 18, 2017. FILE PHOTO | NMG 

By JAMES NGUNJIRI

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Summary

• Deloitte actuarial and insurance consulting leader for Kenya Rebecca Muriuki said bodies like the Institute of Certified Public Accountants of Kenya (ICPAK) and industry regulator Insurance Regulatory Authority (IRA) are critical in giving guidance on areas of technical interpretation of the standard.

Insurers have to rely on professional bodies for guidance on how to implement the new International Financial Reporting Standard (IFRS 17) ahead of implementation in January 2021, experts say.

Deloitte actuarial and insurance consulting leader for Kenya Rebecca Muriuki said bodies like the Institute of Certified Public Accountants of Kenya (ICPAK) and industry regulator Insurance Regulatory Authority (IRA) are critical in giving guidance on areas of technical interpretation of the standard.

“ICPAK did something similar to IFRS 9, IRA is also in the process of issuing guidelines, especially on the issue of how the regulatory reporting will integrate with financial reporting,” said Ms Muriuki during an IFRS 17 insurance CEOs and CFOs forum held in Nairobi.

In January, ICPAK issued implementation guidelines for IFRS 9, the new standard that introduced stringent conditions on how banks provide for non-performing loans. IFRS 9 was effected at the beginning of the year. The guidelines are being used by financial institutions when measuring impairment of financial assets, with banks expected to increase cover for bad loans under the new rules.

IFRS 17 was issued by the International Accounting Standard Board (IASB) on May 18, 2017. It will replace the current IFRS 4 on accounting for insurance contracts.

Kenya Re

managing director Jadiah Mwarania said the industry faces tough challenge in understanding the operational impact of the standard on data, systems and processes. “Given the scale of the envisaged change being brought about by the requirements of the standard, investors and other stakeholders want to understand the likely impact as early as practicable,” said Mr Mwarania.