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METTLEHOUSE CONSULTING HOLDS FIRST-OF-ITS-KIND ROUNDTABLE ON IFRS 17

Image: Inspenonline

By Martins Azuwike

Insurance industry practitioners recently gathered at the Nigeria Insurers Association, NIA’s Multipurpose Hall in Lagos for the maiden edition of IFRS 17 Insurance Industry Roundtable -Series 1. Held by Mettlehouse Consulting Limited, participants, faculties, panel discussants, guests and the press attended the Roundtable workshop on financial reporting described by the organisers as the first of its kind in Nigeria’s insurance industry.

“IFRS 17 is a big, new standard for a big, old industry. It changes fundamentally the way in which an insurance entity reports its financial dimensions and results for a given period and over time. The International Accounting Standard Board (IASB) are highly confident in their expectation that it will bring greater transparency and comparability about the profitability of both new and existing insurance contract business,” said Barineka Thompson, CEO of Mettlehouse Consulting Limited.

He also said: “As the insurance industry in Nigeria strives to surmount the pervasive challenges of IFRS 17 implementation, the unintended risks of how best to model the recognition, measurement, presentation and disclosure of insurance service expenses and other operating expenses as well as other areas where the principles of the standard leaves more for digression, has nonetheless thrown up significant challenges to both operators, regulators, auditors and other advisors.

He added: “MHCL, desirous in supporting the insurance industry in its IFRS 17 Insurance Contract implementation has identified some significant challenges currently faced by Operators, Auditors, Actuaries and other implementation Advisors and Regulators in the transition from IFRS 4 to IFRS 17. One of these challenges is in “Insurance Expense Allocation,” and associated risks of how best to model the recognition, measurement, presentation and disclosure of insurance service expenses and other operating expenses, and still achieve fairness, transparency, comparability and consistency in financial reporting by Insurers and Reinsurers in Nigeria.”

The organisers stated that the purpose of the Roundtable Discussion with the theme: Resolving IFRS 17 Insurance Service Expense Allocation Challenges in Financial Reporting was to engage industry stakeholders,’ IFRS 17 Steering Committee members, implementation advisors, actuaries, IT experts, auditors, and executives of insurers and reinsurers in robust discourse on the apparent challenges of expense allocation and data capture, against the significant variation of IFRS 17 requirements, and recommend best practice solution. ‘We intend to reach a collective resolution that will bring about harmonized principles of practice tailored to suit the Nigerian nuances and achieve comparability and consistency in expense modelling,’ he said.

Some of the key objectives of the Roundtable included appraisal of IFRS 4 and IFRS 17 requirements on expense modelling, identifying IT and data capture format, and recommending best practices for harmonization, comparability and consistency of expense allocation across underwriting companies in the insurance industry. Said Barineka: “It is the desire of MHCL that the Roundtable will be very educative and impactful while the output will serve as input to Regulators for the benefit of all stakeholders. Moreover, it will facilitate efficiency in ongoing transition implementation by operators, and surveillance by regulators for the benefit of all stakeholders.

“To this end, MHCL has put together a body of experts comprising Partners from the Big 4 Audit Firms, practicing and consulting actuaries, CFOs, and regulators.”

The Roundtable organiser, Mettlehouse Consulting Limited (MHCL), is a Financial, Compliance and Management Consulting Firm led by Barineka Thompson, an Ex-Director of Supervision, and Inspectorate Directorates of National Insurance Commission (NAICOM) over the past decade.

In a keynote address at the Roundtable the Commissioner for Insurance and CEO of the National Insurance Commission (NAICOM), Olorundare Sunday Thomas said: “The topic for our discussion is of utmost significance in the realm of insurance accounting and financial reporting as the adoption of IFRS 17 represents a paradigm shift in the accounting standards for insurance contracts, and its implementation has presented the industry with formidable challenges, particularly in relation to the allocation of insurance service expenses.

“We thank Mettlehouse Consulting for willingness to supporting the insurance industry in its IFRS 17 implementation which they have started with the identification of this significant challenge currently faced in our industry and gathering these distinguished personalities to proffer recommendations to achieve transparency, comparability and consistency in financial reporting by our insurance operators in Nigeria.”

He further remarked: ” We all know that the IFRS 17 has fundamentally transformed the way insurance contracts are accounted for as it introduced a principles-based approach that aims to improve transparency, comparability, and consistency in financial reporting. While the overarching objective of IFRS 17 is commendable, the practical implications on expenses allocation have posed intricate challenges for insurers Worldwide. This Roundtable, therefore, presents a timely opportunity for us to engage in collaborative discourse and share insights on navigating the complexities of the insurance service expenses allocation under IFRS 17.”

The CFI also stated that resolving the insurance service expense allocation challenges in financial reporting is an imperative endeavour that necessitates strategic realignment and driving by a proper board approved policy. Although I still recognise individual entities’ peculiarity that plays a pivotal role in their expenses allocation, he said, as a regulated industry, the Commission is committed to the harmonisation of financial reporting practices among our licenced insurance operators in Nigeria to achieve comparability among the industry players as this remains one of the key objectives of IFRS 17.

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“Therefore, in our deliberations today, I encourage each of you present to draw upon your expertise and experiences to delve into the practical complexities and intricacies surrounding the allocation of service expenses under IFRS 17 and possibly proffer solutions that will enable us as industry achieve one of the cardinal objectives of IFRS 17, which is comparability.

“It is my fervent hope that our discussions today will yield actionable strategies and recommendations to address the challenges posed by the allocation of service expenses under IFRS 17. By leveraging on the collective wisdom of this esteemed gathering, we can surmount these challenges and contribute to the advancement of financial reporting practices within the insurance industry in Nigeria, he remarked.

Barineka Thompson who holds MBA is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), an Associate member of the Chartered Institute of Taxation of Nigeria (ACIT) and the Nigerian Institute of Management (AMNIM). He is also a Certified Anti-Money Laundering Specialists (CAMS), and Certified Advanced AML Audit Specialist (CAMS-AUDIT) of the Association of Certified Anti-Money Laundering (AML) Specialists (ACAMS), USA. He is the only Resident Nigerian with the CAMS-AUDIT certification to-date.

Highly skilled, resourceful and dynamic, Thompson has cognate experience in Insurance, Finance, Strategy Management and Hospitality and a subject matter expert in Anti-Money Laundering and Financial Crime Investigation.

He was the Group Head, Finance and Chief Finance Officer of Linkage Assurance Plc before joining the National Insurance Commission (NAICOM) Abuja and served on several corporate Board of Directors among other top management positions in the private and public sector. Prior to joining Linkage Assurance Plc, he served as Acting General Manager/Chief Executive of NICON Hotels Limited, (a fully owned subsidiary of NICON Insurance Plc and former owners of Transcorp Hilton Hotel). He held senior management position in NICON Insurance Plc in several departments before its privatization. He has served as non-executive director on the Board of many companies, including Associated Properties and Trust Plc, Nigeria Aluminium Extrusions Limited, Globe Re-Insurance Plc, Nigeria Hotels Ltd (owners of Ikoyi Hotels) and Abuja International Hotels Limited.

Upon joining the NAICOM in October 2012, he held the office of Director, Finance and Accounts (DFA) in a recent redeployment, after serving as Director, Supervision Directorate, and Director, Inspectorate Directorate. His responsibilities in the two key technical offices covered offsite and onsite supervision and AML/CFT.

He was reputed as one of the pillars responsible for most of the regulatory policies, supervisory initiatives and implementation of major projects of the NAICOM some of which included the facilitation of the issuance of Revised Prudential Guidelines for Insurance institutions in Nigeria in 2022, facilitation of the wide-scale revision and release of a revised prudential returns template, currently being automated by African Reinsurance sponsorship project, facilitation of the seamless implementation of IFRS 9, 15 and 16 accounting standards by insurance institutions in Nigeria, leading the process of design and use of a common IFRS compliant financial reporting and returns template for use by insurance brokers in Nigeria in 2019. He was also the Implementation Team Lead on the revered successes of “No premium, No cover.” Other spheres of his input in the industry include Design and implementation Team Lead of Risk based supervision, which he aligned with the Solvency II Model of insurance supervision of the UK; Team Lead of the ongoing design of Risk-Based Capital, Facilitation of NAICOM’s active participation in the Consolidated Supervision Project of the Financial Sector Regulation Coordination Committee (FSRCC), Design of Regulatory framework and Entrenchment actions on AML/CFT where he is a subject matter expert, Concept Initiator and Team Lead of the revered Tier-Based Minimum Solvency Capital (TBMSC), Team Lead on formulation of the NAICOM corporate strategy 2016-2020 whereon the current designs were revised for 2021-2023, and Team Lead on Revenue remodelling.

When the adoption and implementation of IFRS 17 Insurance Contract debuted in 2017 and with effective date of January 1, 2023, Mr. Thompson steered the way for NAICOM and the Insurance Industry. He served as the NAICOM/Industry Team Lead on IFRS 17 Implementation until his recent compulsory retirement and laid the following foundation actions for seamless implementation and supervision of IFRS 17 by the insurance industry:

  1. Established robust relationship with Financial Reporting Council of Nigeria.
  2. Steering several IFRS stakeholders’ enlightenment sessions
  3. Issuance of Roadmap for the Implementation of IFRS 17 by insurance and reinsurance companies.
  4. Midwifed the creation of Insurance Industry Financial Reporting Working Group (IIFRWG) with membership drawn from both public and private sectors, with local and international expert membership.
  5. Facilitated the IFRS 17 Implementation Guidance Note and Standard Financial Reporting Template issued in October 2022.
  6. Midwifed the formation of Nigeria Actuarial Society Discount Rate Committee (NAS_DRC) to provide standard methodology for discount rate determination with its monthly generated yield curve for use in IFRS 17 process by the industry.
  7. Design supervisory review template and capacity building for analysts and supervisors.

In the course of his service, Mr. Thompson attended many specialist courses and seminars locally and overseas and served as faculty and facilitator in both local and international training of ICAN, ACAMS and the GIABA, Senegal.

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A highly motivated, creative, and versatile economist, researcher, analyst, and writer/commentator on economic development with bias for and experience in community development, citizen wellbeing, financial and corporate analysis.