Nigeria AIICO Insurance Embarks on IFRS 17 Implementation to Elevate Financial Reporting Standards"

AIICO Insurance Plc has initiated the implementation of the International Financial Reporting Standards (IFRS 17) in a move to enhance work processes and achieve excellence in financial reporting. IFRS 17 is a comprehensive standard designed to regulate accounting for insurance contracts globally, replacing the less comprehensive IFRS 4.

Mr. Mayowa Korode, the International Financial Reporting Standards (IFRS 17) Project Manager at AIICO Insurance Plc, shared insights into the strategic reasons for adopting IFRS 17. He stated that the primary goal was to bring consistency to financial reporting worldwide for companies operating under IFRS 17 and facilitate comparisons with firms in other sectors.

Korode emphasized that AIICO Insurance is fully prepared for the implementation, with the company's reports for the first and second quarters of 2023 already following the IFRS 17 model.

IFRS 17 brings about closer alignment between accounting practices and the underlying economics of insurance. It addresses issues present in IFRS 4, such as varying treatments for contract types, outdated estimates for long-duration contracts, and insufficient information on economic values of embedded options and guarantees.

Under IFRS 17, insurance contracts are consistently accounted for by all companies, with updated estimates reflecting current market-based information. The measurement of insurance contracts considers time value and the full range of possible outcomes. The balance sheet in IFRS 17 uses a current measurement model, including discounted cash flows, a risk adjustment, and a contractual service margin (CSM) representing unearned profit.

Income statements align with other industries, excluding investment components from revenue. Entities can choose to recognize changes in discount rates in profit, loss, or other comprehensive income to reduce profit or loss volatility.

IFRS 17 also mandates more detailed disclosures, providing additional insights into key judgments and profit emergence for greater comparability across entities