Best’s Commentary: Market Preparedness for IFRS 17 in the MENA Region Varies

LONDON – IFRS 17, the new accounting standard for insurance contracts, will affect many insurers across the Middle East and North Africa (MENA) when it comes into force for reporting periods beginning on or after 1 January 2023. Analysis from AM Best suggests preparation for the new regime varies significantly by country and insurer.
A new Best’s Commentary, “Market Preparedness for IFRS 17 in the MENA Region Varies,” notes that in general, companies operating in the region’s more-mature regulatory environments show greater readiness for IFRS 17. There is a less consistent picture among the region’s small carriers and in markets with less oversight.
AM Best does not expect the introduction of IFRS 17 to have a direct impact on credit ratings, as AM Best targets the underlying economics of insurers, which is normally unaffected by the accounting regime they report under.
Nevertheless, AM Best will continue to monitor the potential disruption that a lack of preparedness for this fundamental change could cause; for example, to the reporting of accurately stated figures and to the availability of timely management information. In this regard, AM Best views having robust enterprise risk management practices as central to being able to manage the transition successfully.