HARARE – A global advisory firm has warned Zimbabwe’s insurance industry that it is trailing far behind a January 2022 deadline by which they must adopt International Financial Reporting Standard (IFRS)17.
IFRS 17 comes into force in three years’ time with new changes to the calculation of insurance contract liabilities, among a raft of changes that will transform the way insurance firms prepare their financial statements.
After IFRS 17 is introduced, the discount rate will have to reflect current interest rates while reinsurance contracts will be revalued and accounted for separately.
IFRS 17 will also make changes to the way insurance companies define income, according to Clive Mukondiwa, a partner at PwC Zimbabwe.
He said while insurance firms worldwide had made headway in preparing for the transition that includes changes to IT systems and staff training, there was pretty much little progress in Zimbabwe.
To speed up the process, Mukondiwa said the Insurance and Pensions Commission in Zimbabwe must move with speed to ensure that the $400 million sector by Gross Written Premium, complies with global standards.
“The key message is that we are already late,” Mukondiwa told a conference attended by the industry’s financial directors.
“We are behind and we need to catch up. The standard is here and it is a game changer. It is not something that we will say overnight we will do,” said Mukondiwa.
“The regulator must make sure that companies respond. The boards of insurance companies must be aware of IFRS 17 because January 1, 2022 sounds very far but it is not. I doubt if you are going to meet the timeline set by IFRS,” he said. In South Africa, the industry has established teams of experts that were working around the clock to help the industry meet the deadline.