Protocols

THEME: RESOLVING IFRS 17 INSURANCE SERVICE EXPENSE ALLOCATION CHALLENGES IN FINANCIAL REPORTING

It is with great pleasure that on behalf of Mettlehouse Consulting Limited, I warmly welcome all participants, faculties, panel discussants, guests and gentlemen of the press to the Maiden Edition of IFRS 17 Insurance Industry Roundtable – Series 1. This Roundtable workshop on financial reporting happens to be the first of its kind in the insurance industry in Nigeria. The Roundtable is being organized by Mettlehouse Consulting Limited (MHCL), a Financial, Compliance and Management Consulting Firm led by an Ex-Director of Supervision, and Inspectorate Directorates of National Insurance Commission (NAICOM) over the last decade.

It would be recalled that IFRS 17 is a big, new standard for a big, old industry. It changes fundamentally the way in which an insurance entity reports its financial dimensions and results for a given period and over time. The International Accounting Standard Board (IASB) are highly confident in their expectation that it will bring greater transparency and comparability about the profitability of both new and existing insurance contract business.

As the insurance industry in Nigeria strive to surmount the pervasive challenges of IFRS 17 implementation, the unintended risks of how best to model the recognition, measurement, presentation and disclosure of insurance service expenses and other operating expenses as well as other areas where the principles of the standard leaves more for digression, has nonetheless thrown up significant challenges to both operators, regulators, auditors and other advisors.

MHCL, desirous in supporting the insurance industry in its IFRS 17 Insurance Contract implementation has identified some significant challenges currently faced by Operators, Auditors, Actuaries and other implementation Advisors and Regulators in the transition from IFRS 4 to IFRS 17. One of these challenges is in the area of “Insurance Expense Allocation”, and associated risks of how best to model the recognition, measurement, presentation and disclosure of insurance service expenses and other operating expenses, and still achieve fairness, transparency, comparability and consistency in financial reporting by Insurers and Reinsurers in Nigeria.

The purpose of the Roundtable Discussion with the Theme: Resolving IFRS 17 Insurance Service Expense Allocation Challenges in Financial Reporting is to engage industry stakeholders’; IFRS 17 Steering Committee members, implementation advisors, actuaries, IT experts, auditors, and executives of insurers and reinsurers in robust discuss on the apparent challenges of expense allocation and data capture, against the significant variation of IFRS 17 requirements, and recommend best practice solution. We intend to reach a collective resolution that will bring about harmonized principles of practice tailored to suit the Nigerian nuances and achieve comparability and consistency in expense modelling.

Some of the key objectives of this Roundtable includes; appraisal of IFRS 4 and IFRS 17 requirements on expense modelling, identifying IT and data capture format, and recommending best practices for harmonization, comparability and consistency of expense allocation across underwriting companies in the insurance industry. It is the desire of MHCL that the Roundtable will be very educative and impactful while the output will serve as input to Regulators for the benefit of all stakeholders. Moreover, it will facilitate efficiency in ongoing transition implementation by operators, and surveillance by regulators for the benefit of all stakeholders.

To this end, MHCL has put together a body of experts comprising Partners from the Big 4 Audit Firms, practicing and consulting actuaries, CFOs, and regulators. The Commissioner for Insurance has assured us that he will personally give the keynote address, as all Faculties for Paper Presentations and Panel Discussions are already seated here with us in the hall to play their pivotal role.

On behalf of MHCL, I once again invite you to participate actively, ask questions bothering on the topic for discuss as we promise you that it will be a rewarding outing at this Roundtable.

Barineka Thompson

CEO, MHCL.