Preparation of Financial Statements of Insurance Companies
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:
o Provisions on “Premium received in Advance” and “Unallocated Premium” stated in master circular shall form part of the Regulations.
o 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.
