The insurance regulator IRDAI can now announce the date of adoption of the new standards by the Indian insurance industry. The new framework would require domestic insurers to further bolster their disclosure needs, leading to greater transparency and informed decision-making
New Delhi: Finally, after extensive consultations with various stake holders, the Ministry of Corporate Affairs (MCA) has notified new accounting norms, Accounting Standard (Ind AS 117), for the Indian insurance sector, to be applicable from April 1, 2024.
As per the notification dated 12th August 2024, the Indian Accounting Standard ( Ind AS ) 117 has been introduced, with a complete focus on the nuances of insurance contracts.
The Central Government, in consultation with the National Financial Reporting Authority, (NFRA) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2024 which has amended the Companies (Indian Accounting Standards) Rules, 2015.
The MCA has amended the Companies (Indian Accounting Standards ) Rules, 2015, specifically for the insurance sector.
Insurance regulator IRDAI can now announce the date of adoption of the new standards by relevant entities. The new framework would require domestic insurers to further bolster their disclosure needs, leading to greater transparency and informed decision-making.
These standards, modelled on the IFRS 17 issued by the International Accounting Standard Board (IASB) that is adopted in many countries,
The newly incorporated Ind AS 117 on Insurance Contracts establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the Standard.
With regards to the scope, an entity shall apply Ind AS 117 to: insurance contracts, including reinsurance contracts, it issues; reinsurance contracts it holds; and investment contracts with discretionary participation features it issues, provided the entity also issues insurance contracts.
This information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial performance and cash flows.
In preparation for the adoption of Ind AS 117, the equivalent to IFRS 17 ‘Insurance Contracts’, the IRDAI had earlier announced the reconstitution of its expert committee dedicated to the implementation of Ind AS and International Financial Reporting Standards (IFRS).
The committee’s responsibilities are:
-the development of phase-wise timelines that are both ambitious and attainable; crafting recommendations for proforma financial statements and financial disclosures; and addressing concerns arising from transition activities.
Adoption of Ind AS 117 accounting standard and the implementation of risk-based capital and supervision frameworks would further align the Indian market with the bold vision of the IRDAI, said a PwC report.