Compliance with IFRS17 Standards in Takaful Insurance: Challenges, Solutions, and Future Perspectives for Egyptian Market

Abstract

The insurance companies prepare themselves to adopt International Financial Reporting Standard (IFRS 17) insurance contracts from January 1, 2023. IFRS 17 is the first international and comprehensive accounting standard for conventional insurance companies. The Islamic insurance sector would prepare itself to adopt IFRS17. Implementation of IFRS17 to takaful insurance is not straightforward since takaful insurance companies have different operating models. Implementation of IFRS17 to takaful insurance requires investigating whether IFRS17 standard complies with Shariah standards. Therefore, it requires understanding the issues involved and connecting the technical concept of takaful to financial reporting and disclosure to IFRS17 standards.Egypt is the first provider of Islamic insurance, which was launched in 2003 and there are now ten takaful companies operating in Egypt. In Addition, many industry figures expect that the premiums of Egyptian takaful insurance companies will grow by between 20% and 25% annually over the next years.This research aims to explore the challenges and compliance of IFRS 17 implementation with Islamic rules to Takaful insurance, propose and the GAP analysis and financial impact assessment for the takaful insurance companies in Egyptian market.To achieve this objective, the researchers applied a qualitative approach, a literature review, and interviews to understand the process of implementation of IFRS17 to takaful insurance companies in Egypt.This research concluded that takaful companies face significant challenges in applying IFRS17. Additionally, it proposes guidelines for the regulatory authority and takaful insurance companies to connect the technical aspects underlying the Takaful industry concerning Shariah rules to IFRS 17.

Keywords

• ifrs17
• modarba
• takaful insurance