Stanbic IBTC Insurance cracks IFRS 17 code for NAICOM’s first sector approval

Cynthia Ezekwe

Stanbic IBTC Insurance, a subsidiary of Stanbic IBTC Holdings, has broken new ground in the Nigerian insurance industry, becoming the first company to successfully navigate the IFRS 17 standardisation process. The company’s 2023 full year financial report, vetted and approved by NAICOM, sets a new benchmark for transparency and compliance in the sector.

The adoption of IFRS 17, which aims to improve the comparability and consistency of financial reporting across insurance companies worldwide, is a significant step forward in ensuring that the Nigerian insurance industry remains aligned with global best practices. The significant milestone reflects the company’s commitment to transparency, trust, operational excellence, regulatory compliance, and  stakeholder confidence.

The insurance industry in Nigeria, guided by NAICOM, has crossed a significant threshold in its financial reporting practices. Following the issuance of the IFRS 17 standard by the International Accounting Standards Board in 2017, which was implemented in Nigeria in January 2023, all insurance firms in the country have been mandated to transition from the IFRS4 model to the more comprehensive and transparent IFRS17 model. The significant shift, which will enhance the accuracy and reliability of financial reporting across the insurance industry, represents a proactive step toward ensuring that the Nigerian insurance sector remains accountable to both its clients and stakeholders.

For years, the Nigerian insurance industry relied on the IFRS 4 model, which, while practical in its flexibility, fostered a fractured landscape when it came to financial reporting. Insurance companies, with their wide-ranging local accounting practices, lacked a single, unified standard to anchor their financial statements. This led to inconsistencies and difficulties in comparing these reports across jurisdictions, undermining the transparency and reliability of information available to stakeholders.

IFRS 17 was spurred by the need for a more robust and comprehensive standard that could better address the complexities of insurance contracts, which represents a paradigm shift in accounting for insurance contracts. The model provides a consistent and transparent approach to insurance contract accounting. The model also gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial performance and cash flows; as well as provides easier access to external capital and an increase in foreign direct investment.

The adoption of IFRS 17 by the Nigerian insurance industry represents a significant milestone, requiring not only the preparation of financial statements for 2023 but also the retroactive application of the new standard to the 2021 and 2022 financials.

This restatement, while arduous, will yield an unprecedented level of accuracy and uniformity in the accounting practices across the insurance sector, ensuring that financial statements from one insurer can be compared with those of another with minimal confusion and distortion.

Commenting on the milestone, Akinjide Orimolade, chief executive of Stanbic IBTC Insurance, noted that the vetting by NAICOM is a testament of  the company’s commitment to international financial reporting standards.

“Being the first insurer to have our financial report vetted by NAICOM, following the adoption of the IFRS17 standardisation model, is a testament to our unwavering commitment to international accounting standards. This milestone reinforces our dedication to transparency, trust, and operational excellence,”  Orimolade said.

He added that the adoption of the IFRS17 Standardisation Model not only enhances the quality of the company’s financial reporting, but also signifies its proactive stance towards aligning with global best practices, as it aims to set a high benchmark for transparency and integrity in the insurance industry.

The Stanbic IBTC Insurance chief executive also noted that the organisation’s commitment to international accounting processes sets a positive precedent for the industry, stating that the insurer is poised  to navigate challenges, drive sustainable growth, and deliver value to its customers and shareholders.

“Our commitment to industry standards of reporting goes beyond compliance. It reflects our vision to drive sustainable growth and build long-term trust with our stakeholders. The adoption of the IFRS 17 framework underscores our dedication to operational efficiency, accuracy, and the highest levels of financial governance” Orimolade  added.