New reporting standard raises capital costs for insurers in Kenya

New reporting standard raises capital costs for insurers in Kenya

Preparations for IFRS 17 have been completed by 37 percent of global insurers. PHOTO | FILE Insurance Contracts IFRS 17 was issued by the International Accounting Standards Board in May 2017 as replacement for IRFS 4 Insurance Contracts.

The reporting standards require an updated measurement model where estimates are re-assessed in each reporting period.

The new rules will affect the financial statements and key performance indicators of all firms that issue insurance contracts or investment contracts with flexible participation features.

Kenyan insurance firms will face high costs to meet the conditions for reporting rules as the global standardisation policy for underwriters comes into effect on January 1, 2023. The implementation of the accounting standards was delayed by one year due to the Covid-19 pandemic.

The requirements include that insurers double their capital and shift all non-quoted investments into a holding company.

The Association of Kenya Insurers (AKI), the industry’s lobby, has hired a consultant to carry out a survey on the level of preparedness of Kenyan insurers to comply with the requirements of the International Financial Reporting Standards (IFRS 17). New standards

The consultant — Kenbright Actuarial and Financial Services, a subsidiary of Kenbright Holdings Ltd — is expected to release the findings of the survey soon.

“It is not going to take very long,” Tom Gichuhi, AKI’s chief executive told The EastAfrican last week.

“Kenbright won the tender. It is an actuarial firm. We expect the report probably in a month or two months. The reason why we are carrying out this survey is because companies are at different levels of compliance.

“We want to find out who is at what level so that we know what kind of interventions to make, for instance, organising training programmes and ensuring that the staff of these companies understand the requirements of IFRS 17 and how to comply with them,” he said.

Insurance Contracts IFRS 17 was issued by the International Accounting Standards Board in May 2017 as replacement for IRFS 4 Insurance Contracts.The reporting standards require an updated measurement model where estimates are re-assessed in each reporting period.The new rules will affect the financial statements and key performance indicators of all firms that issue insurance contracts or investment contracts with flexible participation features.For these, the insurer must share the performance of underlying contracts with the policyholders, such as in life insurance or investment policies like unit trust investments.“We are all going to go through a nightmare […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.

Leave a Reply