SAMA says insurance sectors formally adopts IFRS 9 and 17

The Saudi Central Bank’s (SAMA) headquarters

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 insurance sector.

Implementation started on January 1, 2023, in line with the implementation date set by the International Accounting Standards Board (IASB), SAMA said in a statement.

In addition, the central bank 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 the Kingdom, as a member of the G20. Therefore, the central bank 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 transparency of reporting, and fostering regulator-sector relationship.

The central bank 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 Vision 2030.

In conjunction with IFRS 17 implementation, SAMA announced the adoption of IFRS 9 financial instruments by the insurance sector starting on January 1, 2023. IFRS 9 was issued by the IASB to supersede the International Accounting Standard (IAS 39) financial instruments.

Similar to IFRS 17 transition plan, SAMA developed an IFRS 9 transition plan with two phases. Both phases were completed successfully by the insurance sector in the Kingdom.

In conclusion, the adoption of IFRS 17 and IFRS 9 is an important achievement of the Saudi insurance sector.

Saudi Arabia is one of the first countries globally to adopt these two standards, the statement said.