ROU rules amended for insurers

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) notified amendments to insurance rules on Tuesday, allowing insurance companies to take Right of Use (ROU) assets as admissible to extent of corresponding ROU liability.

ROU assets recorded against vehicles, office equipment, and intangible assets, would not be considered as admissible assets, SECP added.

The initiative would facilitate insurance companies to comply with requirements of IFRS 16 without any negative impact on their solvency, the regulator stated.

Under International Financial Reporting Standard 16 (IFRS 16 - Leases), insurers are required to recognise ROU liability and a corresponding ROU asset in their financial statements and regulatory returns. The existing rules were silent about treatment of ROU assets for solvency purpose.