MEFMI provides technical assistance to Uganda on IFRS 17 Implementation

The International Accounting Standards Board (IASB) issued International Financial Reporting Standard 17 (IFRS 17) Insurance Contracts in May 2017. The new financial reporting standard replaces IFRS 4 Insurance Contracts with effect from January 2023 and is expected to improve the usefulness, transparency and cross-jurisdictional comparability of insurers’ financial reports. For example, it sets out the methodology on how companies should value insurance and reinsurance contracts and thus significantly affects insurers’ financial position.

In recognition of the complexity of implementing IFRS 17, the Insurance Regulatory Authority of Uganda (IRA) with the support of the Ministry of Finance, Planning and Economic Development of Uganda requested MEFMI for assistance in developing a framework for the implementation of the standard. The IRA intends to implement a standardized approach across the insurance industry for purposes of fair presentation of the financial statements in conformity with IFRS 17. In response, MEFMI provided technical assistance to produce guidelines for the implementation of IFRS 17 in Uganda. The mission was conducted from 7 September 2020 to 5 February 2021.

The objective of the mission was to provide guidance to the Insurance Regulatory Authority of Uganda and its supervised entities on the implementation of IFRS 17 Insurance Contracts in preparation for the adoption of the standard in January 2023. To achieve this objective, the mission carried out a survey to assess the insurance sector’s readiness to implement IFRS 17 and undertook a desktop review of the current prudential regulations for the insurance sector in Uganda. Furthermore, the mission included two (2) training sessions on IFRS 17 implementation. The first training session targeted participants from the insurance industry in Uganda whilst the second session was specifically for IRA members of staff. The combined total of participants for the (2) two sessions was 28.

The main output of the mission was a framework to guide the implementation of IFRS 17 in Uganda. The framework comprises a standard methodology for IFRS implementation, including the consistent definition of Insurance and Reinsurance contracts, test run and offsite reporting templates as well as ICT system and data requirements. It also includes business and actuarial impact assessments arising from the implementation of the standard and recommendations on the regulatory changes that should be made in order to effectively supervise insurance companies post-implementation of IFRS 17.

The mission team comprised two (2) consultants, Mr. Tawanda Chituku, an actuarial consultant and Mr Christopher Musoke, a financial reporting consultant. The team was supported by Mr. Patrick Mutimba and Mr. Noel Mahombera of the MEFMI Secretariat.

Prepared by Noel Mahombera