Omega Ukama 
IN a recent conversation with The Financial Gazette’s Omega Ukama, ZIMRE Holdings’ senior group finance manager, Tafadzwa Mushayi, shed light on the implications of Zimbabwe’s recent transition to IFRS 17.
The new accounting standard, designed to enhance transparency, has posed distinct challenges for the country’s insurance sector, particularly when contrasted with more mature markets. The following are key insights from the discussion:
Q. Given Zimbabwe’s insurance market is still developing, what were the biggest hurdles your company faced in implementing IFRS 17 compared to more established markets?
A. IFRS 17 required businesses to make significant changes to systems and processes, to ensure compliance with the new standard. Our systems are not up to date with IFRS 17 requirements unlike in more established markets. It was difficult to extract data in the required format, workaround plans had to be put in place to make use of the existing systems which were not compliant with producing IFRS 17 data. From a preparer perspective, I noticed that there was a lot of preparation that was required for a seamless transition, and we should have started the process way back maybe two years or so earlier. The data-intensive nature of IFRS 17 makes access to granular data effort-intensive, At the implementation date we were supposed to have the necessary systems and processes in place to collect, store and report this information accurately, our operating systems and the accounting systems were not integrated to meet the IFRS 17 data extractions, resulting in a lot of manual intervention, which is prone to human errors and distorting the final IFRS 17 numbers produced.
Q. Did the lack of a pre-existing Solvency Assessment and Management (SAM) framework in Zimbabwe make IFRS17 adoption more complex?
A. This is subjective as the seamless adoption of the standard was more business oriented in terms of systems and data as alluded above
Q. How did your company leverage the hindsight from other markets that adopted IFRS17 earlier?
ZIMRE Holdings’ senior group finance manager, Tafadzwa Mushayi
A. The standard is complex and data-driven and the approach to adoption differs depending on the systems in place and quality of data thus our approach was tailored specifically to the business and no hindsight from other markets was leveraged on.
Q. How will IFRS 17 change the way your company reports its financial performance? Will it affect your profitability metrics?
A. The implementation of IFRS 17 enables a better appreciation of the business financial performance, especially on profitability. IFRS 17 has changed the disclosures of insurance numbers on the income statement and statement of financial position, additional metrices are expected going forward.
Q. Do you expect IFRS 17 to have any impact on your product pricing or risk management strategies?
A. Since the implementation of IFRS 17 is expected to bring in new insights into business, the view is that business will be able to identify non-performing products which will prompt a detailed analysis of product pricing. The granularity of data collected empowers a more comprehensive understanding of the risks and opportunities present in the business.
Q. Is IFRS 17 implementation expected to create any new opportunities for your company in the Zimbabwean insurance market?
A. IFRS 17 is expected to create new opportunities for the business, but the biggest in my opinion is an opportunity to automate, IFRS 17 requires insurance companies to meticulously gather data at a more detailed level and effectively manage intricate datasets originating from various systems. This undertaking can be significantly facilitated through the utilization of automation tools, which enable the streamlining of data collection and analysis processes, thereby mitigating the need for manual intervention and fostering heightened operational efficiency.
Q. In your view, how will IFRS 17 impact the overall transparency and competitiveness of the Zimbabwean insurance market?
A. Implementation of IFRS 17 facilitates adherence to a uniform accounting standard by insurers. This harmonization facilitates meaningful comparisons across entities and industries enabling stakeholders to gain valuable insights and make informed evaluations about the Zimbabwe insurance market. It also supports the convergence of global insurance practices fostering a more cohesive and interconnected insurance industry.
Q. Do you think IFRS 17 will encourage more foreign investment in the Zimbabwean insurance sector?
A. As the standard is expected to bring uniform accounting by insurers it will be easy for investors to analyze and compare the results of the Insurance business performance across entities, jurisdictions, and industries from an informed point of view which might drive foreign investment into the Country if the insurance sector is an investment target for the investor.
