IRDAI – Press Release on Ind AS based Financial Reporting Framework for insurance sector and release

The Insurance Regulatory and Development Authority of India (“ IRDAI/Authority ”) has issued a press release dated March 30, 2026 (“ Press Release ”), on the approval of the Insurance Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers) (Amendment) Regulations, 2026 (“ Regulations 2026 ”). The Amendment Regulations introduce an Indian Accounting Standards (“ Ind AS ”) based financial reporting framework for insurers, with effect from April 1, 2026. The framework has been finalised pursuant to consideration of public comments received from stakeholders, including insurers, individuals and professional firms on the exposure draft (“ Public Comments ”).

Key Highlights

Press Release

• The framework mandates preparation and presentation of financial statements by all insurers in accordance with Ind AS, including principles relating to recognition, measurement, presentation and disclosure, with the objective of enhancing transparency, consistency and comparability in financial reporting.
• The applicability extends across all categories of insurers, including life, general, standalone health insurers and reinsurers.
• A transition mechanism has been introduced, comprising (i) parallel reporting for a period of two years under both Ind AS and the existing accounting framework, and (ii) for smooth transition, a provision has been made to grant forbearance for one year for insurers facing challenges in immediately shifting to Ind AS.
• During the transition period, such insurers shall continue to submit Ind AS based financial information also to the Authority.
• The framework is developed after extensive stakeholder consultations, including consideration of public comments on the Exposure Draft and engagement with insurers and industry professionals.
• The Institute of Chartered Accountants of India (ICAI) and the Institute of Actuaries of India (IAI) welcomed the adoption of Ind AS and expressed their readiness to support insurers, auditing professionals, and actuaries.
• These amendments represent a significant step towards modernising the financial reporting framework of the insurance sector in India; by aligning with globally accepted standards the regulations will enhance transparency, credibility, and regulatory oversight, while safeguarding policyholder interests and supporting the development of a robust and globally aligned insurance ecosystem.

Public Comments

• Implementation Timeline : While stakeholders suggested phased implementation or extension to April 2027 citing system and data challenges, IRDAI has retained mandatory adoption from April 1, 2026, with provision for one-year forbearance in specific cases.
• Parallel Submission: Stakeholders broadly supported parallel reporting and sought clarity on duration and scope; accordingly, IRDAI has prescribed parallel reporting for a period of two years under both Ind AS and existing applicable accounting framework/IGAAP.
• Segregation of Policyholder & Shareholder Funds: Stakeholders sought guidance on presentation under Ind AS; IRDAI has clarified that separate accounts shall continue as mandated per the Insurance Act, 1938, with further clarifications to be issued.
• Annual Cohort Requirement: Concerns were raised regarding retrospective application; IRDAI has not adopted retrospective requirement but clarified applicability of Ind AS 117 requirements on transition.
• Surplus: Stakeholders sought clarity on the determination and presentation of actuarial surplus; IRDAI has clarified that the distribution of surplus shall continue to be governed by Section 49 of the Insurance Act, 1938 as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025) and has introduced a separate disclosure for non-distributable retained earnings.
• Risk Free Rate (RFR): Stakeholders sought alignment with RBC and clarity on methodology; IRDAI has stated that RFR determination will be specified separately, with applicability of Ind AS 117 provisions.
• Audit: Stakeholders sought clarity on independent validation and audit scope. Stakeholders sought clarity on the independent validation framework, including its scope vis-à-vis statutory audit and existing review processes. IRDAI has clarified that independent validation of Ind AS implementation shall be undertaken during the initial period, with the scope and manner to be specified in consultation with the Joint Expert Group.
• Solvency Framework: Stakeholders recommended alignment with the proposed Risk Based Capital (“ RBC ”) framework; IRDAI has clarified that existing solvency provisions 64 V & 64VA under the Insurance Act, 1938 shall continue, with Ind AS forming a foundation for future RBC implementation.
• Other Regulatory Requirements: Stakeholders sought clarity on applicability of existing regulatory provisions, including actuarial functions, investment regulations, expenses of management, and reporting requirements. IRDAI has clarified that Section 13 of the Insurance Act, 1938 shall continue to apply, and additional clarifications on regulatory aspects will be issued separately.
• Guidance: Stakeholders requested FAQs, guidance notes and support mechanisms; IRDAI has proposed constitution of a Joint Expert Group comprising regulators and industry bodies.
• Taxation: Stakeholders sought clarity on tax treatment under Ind AS and continuation of IGAAP basis; IRDAI has clarified that applicable tax laws shall continue to apply.
• Other Clarifications: Stakeholders sought clarifications on financial statement formats and key performance parameters of insurers, and IRDAI has clarified that necessary guidance will be issued separately.

Summary of Changes

A copy of the Press Release, Regulations 2026 and public comments (along with IRDAI responses) has been attached herewith for your reference.

Source category: IRDAI

Attachments

• Press Release – Ind AS based Financial Reporting Framework for Insurance Sector
• IRDAI (Actuarial, Finance and Investment Functions of Insurers), (Amendment) Regulation
• Public Comment with IRDAI Response