Insurance companies in Nigeria are facing significant financial challenges as they work to comply with the International Financial Reporting Standard (IFRS) 17. Industry sources indicate that these firms are spending between N50 million and N100 million on consultants and software to meet the requirements of the new standard, a hurdle that some financially struggling companies are still attempting to overcome.
Several managing directors whose companies have successfully integrated IFRS 17 into their operations revealed that the process was expensive, with some paying up to N100 million for experts, auditors, and software. Firms unable to meet these financial demands are still in search of consultants who can offer more affordable solutions.
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Many companies that have complied with IFRS 17 opted to lease the required software instead of purchasing it outright, concerned that government regulations could quickly render their systems obsolete. Industry observers have expressed concerns about how firms yet to comply will manage the high costs, especially as even those that have met the requirements are struggling with the financial impact.
As of September 2024, the National Insurance Commission (NAICOM) had approved the 2023 financial accounts of 44 companies, including insurance, reinsurance, and takaful operators, all prepared in accordance with IFRS 17. Under the Insurance Act, insurance entities must submit their annual financial accounts to NAICOM by June 30 each year or face a daily fine of N5,000 for non-compliance.
Among the approved companies are:
- STANBIC IBTC INSURANCE COMPANY
- NEM INSURANCE PLC
- ZENITH GENERAL INSURANCE LIMITED
- AXA MANSARD INSURANCE PLC
- AIICO INSURANCE PLC
- CORONATION INSURANCE PLC
- LEADWAY ASSURANCE LIMITED
- ALLIANZ NIGERIA INSURANCE COMPANY LIMITED
- HEIRS LIFE ASSURANCE LTD
- OLD MUTUAL LIFE ASSURANCE NIGERIA LIMITED, among others.
The adoption of IFRS 17 is expected to enhance transparency and comparability in the insurance sector, though many companies continue to grapple with the financial burden of implementation.
