The Capital Market Authority (CMA) has issued a circular to all insurance companies and Oman Re urging them to prepare for the implementation of International Financial Reporting Standard (IFRS) 17.
In the circular, the CMA recommended to insurance companies that they introduce IFRS 17 in three phases for full implementation by the 2021 deadline, reports Muscat Daily.
The first phase is to conduct a gap analysis in respect of the financial and operational impact of implementation of IFRS 17. The report on the gap analysis should be submitted to the CMA. This phase will be from September to end of December 2018.
The second phase is related to the design of internal rules and processes to cope with IFRS 17 with regard to accounts, statements and other requirements. This phase will also include developing a detailed plan with timelines for its implementations considering the results of the previous phase. The second phase will be from January to December 2019.
The third phase includes commencement of empirical implementation of IFRS 17 ‘insurance contracts’ and evaluation of the results. The implementation will be parallel with the existing system with evaluation of impact of the implementation. The proposed period of the implementation will be throughout 2020.
The objective of implementing IFRS 17, which replaces IFRS 4, is to provide unified standards for accounting for all insurance contracts including reinsurance contracts, allowing comparability for the benefit of investors and insurers, the CMA states. It says the new standard will assist investors, users and analysts understand financial statements and accounting treatment of insurance contracts and the risks insurance companies are exposed to and the impact on the profitability and financial position of such companies.
Such comparison would facilitate merger and acquisition activities and enhance competition to attract capital investments and boost investors’ confidence, says the regulator.