Set to transform the financial reporting landscape for insurers, AFSA has kicked-off preparations for introduction of IFRS 17 Insurance Contracts. This new standard is poised to significantly change how insurance results are shown in the income statement and balance sheet. The ripple effects will be felt across various domains, including finance, actuarial services, data systems, product design, distribution channels, and the methodologies employed in budgeting and forecasting for business planning. IFRS 17 is also expected to influence the cash tax position and dividend distribution, both at the outset and in the subsequent period. AFSA is supported in this journey by World Bank through the SQARP on building technical capacities, and through the Financial Resilience and Development Project (AFRDP) with regard to diagnostics as well as planning and execution.

In addition to its insurance supervision staff, AFSA has asked the actuaries and financial officers of the insurance companies to participate in the training to strengthen their knowledge and ensure common understanding.

The primary objective of this training is to equip participants with the comprehensive knowledge required to comprehend and implement IFRS 17 Insurance Contracts within insurance operations. The first module of the training is split into two chapters: (i) the first chapter aims to impart a detailed understanding of the rationale behind adopting IFRS 17, the challenges insurers encounter during its implementation, and its interplay with IFRS 9 Financial Instruments, including specific exemptions granted to life insurance firms at the EU level. (ii) The second chapter offers an in-depth comparison between the presentation and disclosure mandates of IFRS 17 and the previous, IFRS 4 Insurance Contracts.

Then, participants will delve into the measurement principles of IFRS 17, encompassing the level of aggregation, initial recognition, and the definitions of the Liability for Remaining Coverage (LRC) and the Liability for Incurred Claims (LIC).

The training's agenda includes critical topics such as onerous contract testing, contract boundaries, and the pivotal role of actuaries in the enactment of IFRS 17 Insurance Contracts. To bridge theory with practice, the training incorporates practical exercises, enabling participants to scrutinize financial statements from EU insurance entities and engage in a case study centered on the computation of onerous contracts and the Loss Component.

This initiative is designed to bolster the AFSA's capacity in executing its essential functions in insurance supervision, aligning with advanced European practice, and to pave the way for the IFRS 17 implementation in Albania.