MEFMI Conducts IFRS 17 Impact Assessment in Uganda

As part of the effort to support the Insurance Regulatory Authority of Uganda (IRA) in implementing the International Financial Reporting Standard (IFRS) 17 Insurance Contracts, MEFMI conducted a study to assess the impact of implementation of IFRS 17 on the financial condition and performance of insurers in Uganda. IFRS 17 was issued in May 2017 to replace IFRS 4 with effect from January 2023. It represents a significant change to accounting standards for the insurance industry and sets out a new methodology on how companies should value insurance and reinsurance contracts. The standard is expected to improve the usefulness, transparency and cross jurisdictional comparability of insurers’ financial reports.

The objective of the study was to assess the financial implications of the migration to IFRS 17 on insurance companies in Uganda ahead of the adoption of the standard. Specifically, this entailed developing financial impact assessment guidelines and data collection templates, collecting financial statements data from the insurers, analysing the data to assess the impact, and reporting the findings. The study which was conducted virtually ran from 17 January 2022 to 30 June 2022. Originally, it had been scheduled to finish on 31 March 2022 but delays due to late submission of data by the respondents resulted in a three-month extension.

The intervention enhanced the IRA’s understanding of the impact of the new standard on the financial condition and performance of its supervised entities. This knowledge leaves the authority in a position where it can implement measures to mitigate the adverse impacts and ensure that all entities are able to comply with the standard with minimal disruption. Further, the officials who participated in the study had their awareness and knowledge of the standard enhanced. It is expected that with this knowledge, they will continue to support IFRS 17 implementation in their respective organisations. This is very critical considering the low levels of preparedness observed during the mission.

A total of 55 officials from the Ugandan insurance sector, including nine (9) from the IRA participated in the financial impact assessment. In terms of gender distribution, female participants were 19 compared to 36 males. Mr Tawanda Chituku, an independent actuary, conducted the study assisted by MEFMI and IRA officials.

Prepared by Noel Mahombera