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Insurance bosses start accounting system training

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Association of Kenya Insurers will train leaders in the insurance industry on the adoption of the new international financial reporting standards (IFRS 17). PHOTO | COURTESY

The Association of Kenya Insurers will train leaders in the insurance industry on the adoption of the new international financial reporting standards (IFRS 17) which will be implemented effective January 1.

The new accounting system will replace IFRS 4 in use since 2004.

The two-day training running from November 30 (today) to December 1 is in partnership with Moroccan-based SCR Academy Re which offers technical expertise in the insurance sector.

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IFRS 17 will change accounting for insurance contracts and aims to remove inconsistencies besides improving the comparison of companies.

The training targets CEOs, board directors and heads of finance, ICT, risk and compliance and actuarial services.

IFRS 17 is the first internationally consistent financial reporting standard for insurance contracts. IFRS 4 allows insurers to use different accounting policies to measure similar contracts in different countries.

This accounting model is inconsistent with IFRS standards applied by other industries in the same country, making it difficult to compare insurance to other industries in particularly banking and investment management.

AKI carried out a survey to assess the level of preparedness of insurers to adopt the new standard which revealed there was a 50 per cent overall readiness in the industry.

While establishing the level of preparedness only half of the companies were ready and the other half not prepared to adopt the international standard.

A major challenge highlighted towards the split was the skills gap which necessitated the training.

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The lobby group for insurers has liaised with the industry’s regulator, the Insurance Regulatory Authority (IRA) to develop industry guidelines that will ensure a smooth transition to this reporting standard.

The guidelines will be released before the end of the year whereby the transition from IFRS 4 to IFRS-17 is expected to take on average two and a half to three years.

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