RIYADH — The Saudi Central Bank (SAMA) announced the formal adoption of International Financial Reporting Standard-IFRS 17 Insurance Contracts and International Financial Reporting Standard-IFRS 9 Financial Instruments by the Saudi insurance sector.
Implementation started on Jan. 1, 2023, in line with the implementation date set by the International Accounting Standards Board (IASB).
In addition, SAMA stated that IFRS 17 issued by the IASB in May 2017 will supersede IFRS 4 Insurance Contracts issued in 2004.
The features of the new standard include standardization of the accounting measurement models for insurance and/or reinsurance companies around the world; consistent comparison and analysis of results; and provision of accurate, transparent, and high-quality data for financial statements compared to the previous standard.
SAMA attached huge importance to a seamless and highly effective adoption of the IFRS 17 in Saudi Arabia, as a member of the G20. Therefore, SAMA rolled out a transition plan with four phases in 2018.
Moreover, SAMA stated that the adoption of IFRS 17 contributed to introducing new elements in the insurance industry, improving human and technological resources, enhancing the transparency of reporting, and fostering a regulator-sector relationship.
SAMA pointed out that it is expected that the effort it exerted together with insurance companies during the last four years will go a long way in enabling the Saudi insurance sector to meet the objectives of Saudi Vision 2030.
In conjunction with IFRS 17 implementation, SAMA announced the adoption of IFRS 9 Financial Instruments by the insurance sector starting on 1 January 2023. IFRS 9 was issued by the IASB to supersede the International Accounting Standard-IAS 39 Financial Instruments.
Similar to the IFRS 17 transition plan, SAMA developed an IFRS 9 transition plan with two phases. Both phases were completed successfully by the Saudi insurance sector.
In conclusion, the adoption of IFRS 17 and IFRS 9 is an important achievement of the Saudi insurance sector. It is worth noting that Saudi Arabia is one of the first countries globally to adopt these two standards. — SPA
