Insurance companies will come under the spotlight next week when a top accounting body examines disclosures and reporting standards within the sector.
The Institute of Chartered Accountants of Zimbabwe (ICAZ) and the Insurance and Pensions Commission (IPEC) will host a symposium on financial reporting for insurers in Zimbabwe next Tuesday in the capital amid concerns over the level of reporting standards in the country.
The seminar will be focusing on accounting for treatment in changes in policyholder liabilities, reserving, premium accounting, and presentation and disclosure requirements of insurers with the International Financial Reporting Standard (IFRS).
“There have been vast disparities in accounting, presentation and disclosure by insurance entities in Zimbabwe,” said Anesu Daka who is a director at Chartered Accountants Academy and a member of accounting procedures committee (APC)’s sub-committee on pension and insurance.
“This has resulted in the questioning of the fair presentation of the insurers’ financial reports and rendering their objective comparison difficult.
“One of the main reasons for the diverging financial reporting is lack of adequate comprehension by preparers of financial statements of the International Financial Reporting Standards (IFRS) 4” he added.
In a bid to address this challenge, ICAZ with the support of the insurance regulator undertook a technical research on IFRS and good industry practices on financial reporting by insurers.
This, according to ICAZ, was essential to clarify the generally accepted accounting practices in accounting, presentation and disclosure by insurers within the IFRS framework and global regulations, which include the requirements of Solvency II.
TA Holdings chief financial officer Bothwell Nyajeka, who is also the APC sub- committee chairperson, will present papers at the seminar.
IPEC head of risk Josphat Kakwere and Pupurai Togarepi (head — prudential supervision) will also address the delegates.
Experts say stiff competition in Zimbabwe’s insurance industry, currently emerging from a decade-long economic contraction, has forced rivals to apply premium undercutting strategies to tilt the game in their favour.
Price undercutting has been blamed for wiping out capital in most insurance firms.
Industry premiums declined by between 40 and 60 % in the period February 2009 to August 2010.