The Saudi Central Bank (SAMA) recently held a Webinar under the title "Transition to International Financial Reporting standard No. 17 (IFRS 17) -Insurance Contracts-", a new accounting standard that is aimed at providing more accurate, transparent and quality information to users of the financial statements of insurance companies compared to the current standard, i.e., IFRS 4.
Five panel discussions, moderated by employees of the General Department of Insurance Control at "SAMA", saw more than 400 individuals from 20+ countries attending the Webinar, including finance teams of Saudi insurance companies, insurance consultants, external auditors, actuaries, software vendors, regional regulators, and others with interest in the topic from the region and beyond.
This Webinar is a continuation of the Central Bank's efforts in preserving the integrity of the implementation of the transition plan for this standard and ensuring its smooth adoption. It may be noted that IFRS 17 was issued in May 2017, and it will be applicable from 1st January 2023, replacing IFRS 4 issued in 2004. The revised standard was developed over several years. One of the most important features of this standard is standardization of the accounting model for insurance companies around the world and the ability to compare and analyze financial statements consistently, in addition to providing more accurate, transparent and quality information than the existing financial statements.
This standard is also considered among the most complex accounting standards according to the opinions of specialists and experts in this field due to the unique nature of insurance contracts and associated accounting and actuarial models and policies. In continuation of SAMA's relentless efforts to keep pace with the changes and to organize the transition process in Saudi insurance sector, the Central Bank issued a circular in 2018 giving clear directions to insurance and reinsurance companies operating in the Kingdom, with the aim of ensuring proper implementation of the transition plan for this standard. Accordingly, the transition plan was divided into four phases, namely, Gap Analysis, Financial Impact Assessment, Implementation Plan, and Implementation & Dry-run.
In this context and to ensure timely implementation of the transition plan, the Central Bank has so far completed its first two phases (i.e., Gap Analysis and Financial Impact Assessment). A number of workshops were also held with the insurance sector to apprise them of the most important observations regarding the outputs of the two phases, and SAMA's expectations in those areas. The Central Bank has now issued instructions for the third phase (i.e., Implementation Plan). This phase is scheduled to end by March 2021, to be followed by the Implementation phase, which is the last phase of the transition plan before IFRS17 goes live.