Final notification of the Insurance Regulatory and Development Authority of India (Preparation of Financial Statement and Auditors Report of Insurance Companies (First Amendment) Regulations, 2021 – IRDAI
View PdfFinal notification of the Insurance Regulatory and Development Authority of India (Preparation of Financial Statement and Auditors Report of Insurance Companies (First Amendment) Regulations, 2021 – IRDAI
- For Para 2 of Part I of Schedule B of the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002, the following shall be substituted, namely:
- “2. Premium (i) Premium shall be recognized as income over the contract period or the period of risk, whichever is appropriate. (ii) “Premium received in Advance” is the premium where the period of inception of the risk is outside the accounting period and is to be shown under current liabilities. (iii) “Unallocated premium” includes premium deposit and premium which has been received but for which risk has not commenced. It is to be shown under current liabilities.
- Unearned Premium Reserve A reserve for unearned premium shall be created as the amount representing that part of the premium written which is attributable to, and allocated to the succeeding accounting periods. Such Reserves shall be computed as under:
- i) Marine Hull – 100 percent of Net Written Premium during the preceding twelve months;
- ii) Other Segments – 50 percent of Net Written Premium during the preceding twelve months; or on the basis of 1/365th method on the unexpired period of the respective policies. However, Insurers shall follow the method of provisioning of Unearned Premium Reserve in a consistent manner. Any change in the method of provisioning can be done only with the prior written approval of the Authority.”
- This notification has come into effect from the first day of the financial year after notification of these regulations.
