Exposure Draft of Insurance Regulatory and Development Authority of India (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) (First Amendment) Regulations, 2021

Last updated: 08 January 2021

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Quick Summary

The IRDAI has released an exposure draft for the first amendment to the 2002 regulations concerning the preparation of financial statements and auditor's reports for insurance companies. This amendment aims to incorporate provisions for Unexpired Premium Reserve (UPR), Premium Received in Advance, and Unearned Premium directly into the regulations, replacing previous circular-based arrangements. The changes are being made as the implementation of Ind-AS standards is not currently feasible. Stakeholders are invited to submit their comments and suggestions by 22nd January 2021.

Insurance Regulatory and Development Authority of India

Ref. No:- Date:07-01-2021

Exposure Draft of Insurance Regulatory and Development Authority of India (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) (First Amendment) Regulations, 2021

Background

The Unexpired Premium Reserve [UPR] provisions formed part of Para 2 of Schedule B of IRDA (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002. On notification of Insurance Laws (Amendment) Act, 2015, the provisions of Section 64V(1)(ii)(b) have been deleted. Accordingly, the said provisions of UPR mentioned in the Regulation were amended through a circular as a stop gap arrangement.

The main reasons for amending the provisions through a circular was that the Authority, at that time, was contemplating implementation of Ind-AS. In the present scenario, implementation of the Ind AS standards may not be feasible at least for the next few years. Accordingly, it is proposed to amend Para 2 of Part 1 of Schedule B of IRDA (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002 to replace the provisions relating to UPR, Premium Received in Advance and Unearned Premium.

Proposed Amendment

Accordingly, draft regulations have been prepared. A brief summary of the draft regulations is as under:

Provisions on “Premium received in Advance” and “Unallocated Premium” stated in master circular shall form part of the Regulations.
Provision on “Unexpired Premium Reserve” which is presently governed by the master circular shall form part of the Regulations.

The draft of the IRDAI (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) (First Amendment) Regulations, 2021 is at Annexure-A.

The comments/suggestions on the draft Regulations may be forwarded to Mr. Sumit Arora, Assistant Manager at sumit.arora@irdai.gov.in with a copy to Mrs. R Uma Maheswari, Deputy General Manager at uma@irdai.gov.in by 22^nd January, 2021 in the format [Annexure-1] attached herewith.

R K Sharma
General Manager

FAQ :

The exposure draft proposes the first amendment to the IRDAI (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002, to update provisions related to Unexpired Premium Reserve, Premium Received in Advance, and Unearned Premium.

The amendment is proposed because the previous provisions for Unexpired Premium Reserve were part of the 2002 regulations, which were amended via a circular as a temporary measure following the Insurance Laws (Amendment) Act, 2015. Also, the implementation of Ind-AS standards is not feasible in the near future.

The amendment proposes to replace the existing provisions relating to Unexpired Premium Reserve, Premium Received in Advance, and Unearned Premium within the regulations.

Comments and suggestions can be provided by any interested party, including insurance companies and other stakeholders.

The deadline for submitting comments and suggestions is 22nd January 2021.

Comments should be forwarded to Mr. Sumit Arora at sumit.arora@irdai.gov.in with a copy to Mrs. R Uma Maheswari at uma@irdai.gov.in, using the format provided in Annexure-1.