CMA Organizes Workshop on IFRS 17 “Insurance Contracts”
The Capital Market Authority organized a workshop Tuesday on IFRS 17 “Insurance Contracts” at the Businessmen’s Hall in collaboration with KPMG. The workshop was presented by Mr. Paul Callegham, Mr. Yousuf Hassan and Asad Irshad in the presence of HE Sheikh Abdullah Salim Al Salmi, Executive President of CMA and officials from CMA, MSM, MCDC and representatives of insurance companies and brokers.
The aim of the workshop is to provide updated information on the latest accounting practices, the new standards issued by International Accounting Standards Board (IASB) and the new standard IFRS 17 “Insurance Contracts” which was issued in May 2017 to replace IFRS 4 issued by IASB in 2004.
The presenters of the workshop said the objects of the new standard are to provide unified standard of accounting on all insurance contracts including reinsurance contracts with the potential of comparison for the interest of investors and insurers. The new standard would assist users and analysts of financial statements understand accounting treatment of insurance contracts and risks insurers are exposed to and the impact on the profitability and financial positions of such companies. It also increases comparability between insurance companies and between insurance and other parts of the financial industry which would ease takeover and acquisition activities and increases competitiveness to attract capital investments and gain the confidence of investors.
The presentations reviewed the challenges facing the companies in implementing the new standard as it provide for radical change in the accounting practices coupled with new terminology in addition to operational challenges in the implementation of the new standard including upgrading the systems of the company.
The workshop emphasized the importance of the insurers preparing for the implementation of IFRS 17 by reviewing their processes to by ready for implementation in 2021 by providing the required resources for the transition. The same requirements also apply on the regulators and supervisors.
IFRS17 would be implemented on 1st January 2021 and would be mandatory for all insurance companies. Early implementation is possible before 2021 provided IFRS 9 “Financial Instruments” is implemented as well as IFRS 15 “Accounting revenues from contracts with customers”.
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