Three major factors will shape the Nigerian insurance industry this year, following pressures from regulatory authority to steer the industry for performance.

The three major factors expected to shape the sector in 2011 are regulatory compliance especially in meeting the deadline on International Financial Reporting Standard (IFRS); increased pressure on profitability and the internationalisation of insurance business by the local market.

Mr Ken Aghoghovbia, Regional Director (West Africa) of Africa Reinsurance Corporation told Vanguard on phone that insurance industry could not afford to be left out in the drive to standardise the sector.

He said, "In order to comply, insurance companies must be able to ensure that their data are reliable, controlled and accurate, that financial reporting practices are being introduced to improve internal risk control and that the technology is enabling the management to make informed decisions based on trusted and quality data."

Following the approval of the Federal Executive Council the Nigerian Accounting Standards Board (NASB) in December 2010, issued an implementation roadmap for Nigerian's adoption of IFRS which set a January 2012 date for compliance for publicly quoted companies and insurance companies in Nigeria.

Financial services sector including the National Insurance Commission (NAICOM) and the Securities and Exchange Commission also adopted this date for compliance and has issued compliance circulars to ensure full implementation of IFRS in Nigeria.

Besides, insurance companies are expected to follow full system conversion to IFRS well ahead of the January 2012 compliance date set by government and regulatory agencies.

Commission will meet with concerned firms on its proper implementation with theme, "Towards a cost effective IFRS conversion in the insurance industry."

NAICOM had made arrangement to discuss issues concerning IFRS with the underwriting firms so as to facilitate a cost_effective implementation of IFRS and minimising the possible impact of its drawback on financial reporting practices in the nation's insurance sector.

Part of the objectives of the meeting of the regulatory body with insurers include, to identify the challenges that lie on the road ahead for the insurance industry as Nigeria adopts IFRS; to agree on how best to achieve a seamless conversion and cost implications and prudential implication of choices.

Aghoghovbia noted, "We are really beginning to see increased awareness of the need to accommodate the international nature of today's insurance market hence the demand for technology platforms that support multiple languages and can be accessed globally via the Internet is increasing as well."