IRDAI vide Circular dated February 12, 2024 issued an Exposure Draft on ‘Insurance Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions for Insurers) Regulations, 2024’ (Exposure Draft) to ensure the sound and responsive management practices with respect to Actuarial, Finance and Investment including but limited to the valuation of assets and liabilities, regulatory reporting, bonus distributions, solvency, and risk management and to protect the interest of stakeholders.
The proposed draft intends to repeal the following extant prescriptions:
1. IRDAI (Actuarial Report and Abstract for Life Insurance Business) Regulations, 2016 and subsequent amendments;
2. IRDAI (Distributions of Surplus) Regulations, 2002;
3. IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016;
4. IRDAI (Assets, Liabilities and Solvency Margin of General Insurance Business) Regulations, 2016 and subsequent amendments;
5. IRDAI (Appointed Actuary) Regulations 2022;
6. IRDAI (Investment) Regulations, 2016;
7. IRDAI (Preparation of Financial Statements and Auditors’ Report of Insurance Companies) Regulations, 2002 and subsequent amendments;
8. IRDAI (Inspection and Fee for Supply of
9. IRDAI (Loans or Temporary Advances to Full Time Employees of the Insurers) Regulations, 2016.
The proposed Regulations would become effective from 1st April, 2024 and shall remain in force for a period of 3 (three) years thereafter unless reviewed or repealed earlier
Major highlights/proposed changes in the existing prescriptions applicable for general insurers:
1. Principal Governing the Actuarial, Finance and Investment Functions of Insurers: Insurer have been advised to follow the below mentioned principles:
a. Mathematical Reserves or Technical Liabilities shall be based on sound actuarial principles.
b. Solvency margin shall be ensured at least at the control level all times.
c. Financial statement shall reflect true and fair picture of the financial condition of the insurer.
d. Funds shall be invested such that the policyholders’ liabilities shall be met and when due.
e. Suitable and adequate resource shall be available to carry out actuarial, finance and investment functions.
2. Board Approved Policies of Insurer: To have a well-documented policy governing areas of actuarial, finance and investment functions approved by its Board on an annual basis, which shall be reviewed periodically by the Board. This regulation is applicable to all the insurers.
3. Schedule I – Actuarial Functions: Rules, processes, and formats with respect to Actuarial Functions including Appointment, Duties and Responsibilities of Actuary have been provided in Schedule I of the Exposure Draft.
4. Schedule II – Finance Functions: Rules, processes, and formats with respect to Finance Functions including preparation of financial statements and management reports etc., have been provided under Schedule II of the Exposure Draft.
5. Schedule III – Investment Functions: Rules, processes, and formats with respect to Investment Functions such as Money Market Instrument, Approved Investments etc., have been provided under Schedule III of the Exposure Draft.
6. Schedule IV – Loans and Advances by Insurance Companies: The Authority has provided detailed rules, processes, and formats with respect to Loans and Advances provided by Insurers.
7. Schedule V- Inspections and Supply of Returns: The Authority has provided detailed rules, processes, and formats with respect to Inspection and circulation of MOA and AOA if asked by the Policyholders subject to Application under Section 20(3) of the Insurance Act, 1938.
A copy of the Exposure Draft is attached herewith for your ready reference.
Source category: IRDAI
Attachments
- /2024/349_Notice_Exposure_Draft_IRDAI_(Actuarial,_Finance_and_Investment_Functions_of_insurers)_Regulations,_2
- /2024/349_Format_for_Comment_Exposure_Draft_IRDAI_(Actuarial,_Finance_and_Investment_Functions_of_insurers)_Re
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