Debasish Panda, chairman,IRDAI
“It is our endeavour to implement Ind AS (including Ind AS 117) for insurers in India from 1st April, 2027 based on our experience and learnings from the proforma submissions and the communication in this regard will be circulated at an appropriate time,” said the IRDAI
IRDAI has already outlined a detailed schedule and three phase plans to implement IFRS 17 norms for the insurance industry
Hyderabad: With the beginning of the countdown for implementing IFRS 17 plans for the Indian insurance sector, regulator IRDAI is organisng its eighth Bima Manthan to meet all senior functionaries of the industry including CEOs in Hyderabad over two days starting from Monday to finalise the micro details for this grand transitional task to be undertaken over next couple of years.
To be addressed by IRDAI chairman Debasish Panda, the 2-day meet of industry CEOs and CFOs and chief Risk Officers(CROs) will lay out implementation strategy, rollout plan, technology adoption in the key areas of Indian Risk-Based Capital (RBC) regime, RiskBased Supervisory Framework (RBSF) and the adoption of International Financial Reporting Standards (IFRS) i.e. Ind AS.
The IRDAI will meet the general insurers on Monday and the life insurers on Tuesday.
In a detailed circular to the insurers recently, the IRDAI has said the Ministry of Corporate affairs (MCA) has notified Ind AS 117: Insurance Contracts (Indian equivalent of IFRS 17) on 12th August, 2024 effective from 1st April, 2024.
Ind AS implementation for the Indian insurance sector is expected to significantly impact the financial reporting systems and processes and as such, these changes need to be planned, managed, tested and executed well in advance of the implementation date, said the IRDAI.
The IRDAI has been in continuous engagement with all the stakeholders, sensitizing industry towards effective implementation and capacity building.
The IRDAI is keen to implement Ind AS in insurance sector and is taking necessary steps to facilitate smooth implementation process.
Earlier, the IRDAI has outlined a detailed schedule and three phase plans to implement IFRS 17 plans for the insurance industry.
The IRDAI, taking cues from banking and NBFC industry, had advised insurers to prepare and submit Ind AS compliant proforma financial statements as per the following schedule.
The proforma financials has to be prepared in compliance with applicable Ind AS (including Ind AS 117).
“It is our endeavour to implement Ind AS (including Ind AS 117) for insurers in India from 1st April, 2027 based on our experience and learnings from the proforma submissions and the communication in this regard will be circulated at an appropriate time,” said the IRDAI.
In order to understand the challenges in implementing Ind AS, insurers were asked to perform Gap Assessment in respect of Data, System, Resources and various other aspects of Ind AS implementation.
The major concerns identified in the gap assessment reports includes lack of required information in past years’ data, need for upscaling IT systems and changes in disclosure requirements.
However, considering the resources and systems constraints, insurers can prepare proforma financials basis high level assumptions. The Indian insurers have to document and disclose the assumptions used in the preparation of Proforma financials, said the IRDAI.
In addition, insurers have to disclose the timelines for addressing any gaps in their proforma financial preparation to ensure full alignment with Ind AS principles .
The Indian GAAP(IGAAP) financial statements will continue to be considered as the financial statements for all Regulatory purposes during the period of submission of proforma financials.
The proforma financial statements will be signed by the appointed actuary and CFO of the insurer. It is encouraged that the proforma financial statements are subject to a limited review or audit by an independent chartered accountant and an independent actuary, said the IRDAI.
According to the IRDAI, relaxation in the timelines for submission of proforma financials will be provided to the new insurers commencing business from calendar year 2024 onwards. New insurers on completion of one year of commencement of business has to submit proforma financials statement for that respective financial year within 180 days from the end of the financial year.
Among the large re/insurers which will be completing Ind AS compliant proforma financial statements in the first phase include Life Insurance Corporation, GIC Re, New India Assurance, ICICI Lombard General Insurance, HDFC Life and Bajaj Allianz Life while the list for the second phase include Bajaj General Insurance, HDFC Ergo General Insurance, SBI General, Tata AIG General.
Rest of the insurers have to comply with the IFRS norms in the third phase.