Unit 4 - Assets and Liabilities

8/13/2019 Unit 4 - Assets and Liabilities

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THE GAZETTE OF INDIA: EXTRAORDINARY [PART III ---SEC. 4]

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY, NEW DELHI

NOTIFICATION

New Delhi, the 14th July, 2000

Insurance Regulatory and Development Authority (Assets, Liabilities, and Solvency Margin of Insurers)

Regulations, !!!

"#$o#IRDA%Reg#%&%!!!#'

In exercise of the powers conferred by clauses (y), (z) and (za) of sub-section (2) of section 114A of the Insurance Act,

19!, (4 of 19!), read with section 2" of the Insurance #e$ulatory and %e&elop'ent Authority Act, 1999 (41 of 1999),

the Authority, in consultation with the Insurance Ad&isory o''ittee, hereby 'aes the followin$ re$ulations, na'ely*-

1. Short title and commencement#(1) These regulations may be called the nsurance !egulatoryand De"elo#ment $uthority ($ssets, %iabilities, and &ol"ency 'argin o nsurers) !egulations, 2000.

(2) They shall come into orce rom the date o their #ublication in the icial *a+ette.

# Definitions#'(1) n these regulations, unless the contet otherwise re-uires

(a) /Act means the nsurance $ct, 13 (4 o 13)

(b) /Authority means the nsurance !egulatory and De"elo#ment $uthority established under subsection (1) o section o the nsurance !egulatory and De"elo#ment $uthority $ct, 1 (41 o

1)

(2) $ll words and e#ressions used herein and not deined but deined in the nsurance $ct, 13 (4 o

13), or in the nsurance !egulatory and De"elo#ment $uthority $ct, 1 (41 o 1), or in any

!ules or !egulations made thereunder, shall ha"e the meanings res#ecti"ely assigned to them in those$cts or !ules or !egulations.

# *aluation of Assets#5"ery insurer shall #re#are a statement o the "alue o assets in 6orm !D$

$ssets $$ in accordance with &chedule .

+# Determination of Amount of Liabilities#5"ery insurer shall #re#are a statement o the amount o

liabilities in accordance with &chedule $, in res#ect o lie insurance business, and in 6orm 7* inaccordance with &chedule 8, in res#ect o general insurance business, as the case may be #

1. Determination of Solvency Margin#5"ery insurer shall #re#are a statement o sol"ency margin

in accordance with &chedule $, in res#ect o lie insurance business, and in 6orm 9* inaccordance with &chedule 8, in res#ect o general insurance business, as the case may be.

1.ealth Insurance -usiness# :here the insurer transacts health insurance business, #ro"iding

health co"ers, the amount o liabilities shall be determined in accordance with the #rinci#les s#eciied

under these !egulations.

2.-usiness outside India. :here the insurer transacts insurance business in a country outside ndia,

and submits statements or returns or any such #articulars to a #ublic authority o that country, he shall

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enclose the same along with the 6orms s#eciied in accordance with these !egulations and the

nsurance !egulatory and De"elo#ment $uthority ($ctuarial !e#ort and $bstract) !egulations, 2000.

;ro"ided that i the a##ointed actuary is o the o#inion that it is necessary to set additional reser"eso"er and abo"e the reser"es shown in the statements or returns or any such #articulars submitted to the

#ublic authority o a country outside ndia, he may set such additional reser"es.

. "urnishing of "orms# The 6orms, namely, 6orm !D$ $ssets $$ , 6orm 7*, and 6orm 9*,shall be urnished se#arately or 8usiness within ndia and Total 8usiness transacted by the insurer.

.# /ersonal visit of appointed actuary to the Authority# The $uthority may, i considered necessary

and e#edient, as< the a##ointed actuary to ma


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Schedule I

*AL0A1I2$ 2" ASS31S

(see #e$ulation )

# Interpretation# n this &chedule, unless the contet otherwise re-uires, =nonmandated in"estments> means thosein"estments that are neither a##ro"ed securities nor a##ro"ed in"estments.

2. *alues of Assets#'(1) The ollowing assets should be #laced with "alue +ero,(a) $gent>s balances and outstanding #remiums in ndia, to the etent they are not realised within a #eriod o thirty days(b) $gents> balances and outstanding #remiums outside ndia, to the etent they are not realisable

(c) &undry debts, to the etent they are not realisable(d) $d"ances o an unrealisable character(e) 6urniture, itures, dead stoc< and stationery

() Deerred e#enses(g) ;roit and loss a##ro#riation account balance and any ictitious assets other than #re#aid e#enses(h) !einsurer>s balances outstanding or more than three months

(i) ;reliminary e#enses in the ormation o the com#any

(2) The "alue o com#uter e-ui#ment including sotware shall be com#uted as under?(i) se"enty i"e #er cent. o its cost in the year o #urchase

(ii) ity #er cent. o its cost in the second year

(iii) twentyi"e #er cent. o its cost in the third year and

(i") +ero #er cent. thereater.

() $ll other assets o an insurer ha"e to be "alued in accordance with the nsurance !egulatory and De"elo#ment$uthority (;re#aration o 6inancial &tatements and $uditor>s !e#ort o nsurance @om#anies) !egulations, 2000.

. Statement of Assets#5"ery insurer shall #re#are a statement o assets in 6orm !D$$ssets $$.


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"orm IRDA Assets AA(&ee !egulation )

N&A!$N@5 !5*A%$T!B $ND D5C5%;'5NT $AT7!TB ($&&5T&, %$8%T5&, $ND &%C5N@B

'$!*N 6 N&A!5!&) !5*A%$TN&, 2000.

&tatement o $ssets as at 1st'arch,20.

"orm 4ode? E FE FE FE FE FE FE FE FE F

Name o nsurer? !egistration Number? Date o registration?

@lassiication? 8usiness :ithin ndiaG Total 8usiness

tem

No.

(1)

@ategory o $sset

(2)

;olicyholdersH unds?

$mount ( in ru#ees

la


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Schedule IIA

*aluation of Liabilities Life Insurance

(+ee #e$ulation 4)

. Interpretation#n this &chedule,

(a) /"aluation date, in relation to an actuarial in"estigation, means the date to which the in"estigation relates.

(b) /uni"ersal lie contracts means those contracts that are #resented in an unbundled orm. The contracts where#olicyholders ha"e an o#tion to in"est in units o insurer>s segregated und(s) shall be treated as /lin.

(L) in the o#inion o the a##ointed actuary, a method o "aluation other than the *ross ;remium 'ethod o "aluation isto be ado#ted, then, other a##roimations (e.g. retros#ecti"e method) may be used.

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;ro"ided that the amount o calculated reser"e is e#ected to be atleast e-ual to the amount that shall be #roduced by

the a##lication o *ross ;remium 'ethod.

(3) The method o calculation o the amount o liabilities and the assum#tions or the "aluation #arameters shall not besubect to arbitrary discontinuities rom one year to the net.

4. The determination o the amount o mathematical reser"es shall tas e#erience study, where a"ailable. reliable

e#erience study is not a"ailable, the "alue(s) can be based on the industry study, i a"ailable and a##ro#riate. neither is a"ailable, the "alues may be based on the bases used or #ricing the #roduct. n establishing the

e#ected le"el o any #arameter, any li


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(2) Mortality ratesto be used shall be by reerence to a #ublished table, unless the insurer has constructed a

se#arate table based on his own e#erience?

;ro"ided that such #ublished table shall be made a"ailable to the insurance industry by the $ctuarial &ociety ondia, with the concurrence o the $uthority.

;ro"ided urther that such rates determined by reerence to a #ublished table shall not be less than hundred #ercent. o that #ublished table.

;ro"ided urther that such rates determined by reerence to a #ublished table may be less than hundred #er cent. othat #ublished table i the a##ointed actuary can ustiy a lower #er cent.

() Morbidity ratesto be used shall be by reerence to a #ublished table, unless the insurer has constructed a

se#arate table based on his own e#erience?

;ro"ided that such #ublished table shall be made a"ailable to the insurance industry by the $ctuarial &ociety o

ndia, with the concurrence o the $uthority?

;ro"ided urther that such rates determined by reerence to a #ublished table shall not be less than hundred #er

cent. o that #ublished table.

;ro"ided urther that such rates determined by reerence to a #ublished table may be less than hundred #er cent. o

that #ublished table i the a##ointed actuary can ustiy a lower #er cent.

(4) /olicy maintenance e9pensesshall de#end on the manner, in which they are analysed by the insurer, &iz,

ied e#enses and "ariable e#enses. The "ariable e#enses shall be related to sum assured or #remiums or

beneits. The ied e#enses may be related to sum assured or #remiums or beneits or #er #olicy e#enses. $ll

e#enses shall be increased in uture years or inlation, the rate o inlation assumed should be consistent with the

"aluation rate o interest.

(I) *aluation rates of interest, to be used by a##ointed actuary

(a)shall be not higher than the rates o interest, or the calculation o the #resent "alue o #olicy cash lows reerredto in #ara 4, determined rom #rudent assessment o the yields rom eisting assets attributable to bloc


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(d) in res#ect o #artici#ating business , shall be based on the assum#tion (with regard to uture in"estment

conditions), that the scale o uture bonuses used in the "aluation is consistent with the "aluation rate o

interest, and

(e) in res#ect o single #remium business, shall ta


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. Statement of Liabilities $n insurer shall urnish a statement o liabilities in accordance with the nsurance!egulatory and De"elo#ment $uthority ($ctuarial !e#ort and $bstract) !egulations, 2000.


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Schedule II-

(+ee #e$ulation 4)

*aluation of Liabilities (


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"orm und and

shareholders> unds

(b) /&ol"ency !atio means the ratio o the amount o $"ailable &ol"ency 'argin to the amount o !e-uired &ol"ency'argin.

5. Determination of Solvency Margin#5"ery insurer shall determine the re-uired sol"ency margin , the a"ailablesol"ency margin, and the sol"ency ratio in 6orm 9 as s#eciied under nsurance !egulatory and De"elo#ment $uthority

($ctuarial !e#ort and $bstract), !egulations, 2000.

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Schedule III-(+ee +ection 0)

D313RMI$A1I2$ 2" S2L*3$4= MAR


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Unit 4 - Assets and Liabilities

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