By Abigail Nkhata – Assistant Credit Controller
IFRS 17, insurance contract standard, became effective on 1 January 2023, replacing IFRS 4. This standard has transformed how insurers and reinsurers measure contracts, recognise revenue, and report financial results. One area that has gained heightened importance under the new standard is credit control. As part of this shift, credit control has become a strategically important function.
The company fully adopted IFRS 17 and is continuously monitoring its credit control processes to ensure complete alignment with the standard’s requirements. Management of receivables is no longer just an administrative task but a vital contributor to accurate cashflow forecasting, liability measurement and sustainable liquidity.
Key focus of credit control with the implementation of IFRS 17 include:
- Reliable Cash Flow Projections
IFRS 17 requires realistic, probability-weighted cash flow estimates. Late or doubtful premium payments can distort these projections and affect liability valuations.
- Management of Aged Debt and Profitability
Uncollected premiums reduce expected future cash flows and may trigger loss components, particularly for overaged receivables. This affects provisions and, ultimately, the company’s profitability.
- Early Detection of Credit Losses
IFRS 17 works alongside IFRS 9 on impairment. Strong credit control identifies overdue or high-risk accounts early, reducing exposure to bad debts.
- Stronger Liquidity and Operational Stability
Timely premium collections support smooth claims payments, stable cash flow, and effective capital management—critical in today’s regulatory environment.
Credit control extends beyond collections. It involves managing broker and cedant relationships, collaborating with underwriting and claims teams, and taking a strategic approach to receivables management.
Under IFRS 17, credit control has evolved into a strategic function rather than a routine process. Organizations that strengthen collection processes can enhance financial accuracy, and improve liquidity, supporting sustainable performance in an era of greater transparency.