Major Relief for Insurance Sector – Circular No– IRDA/F&A/CIR/ACTS/023/01/2020
Circular No– IRDA/F&A/CIR/ACTS/023/01/2020
Circular Date– January 21, 2020
Overview of Circular–
- This circular has an overriding impact on the IRDA’s earlier circular no IRDA/F&A/CIR/ACTS/146/06/2017 dated June 28,2017 and IRDA/F&A/CIR/ACTS/ 262/12/2016 dated December 30, 2016;
- With the earlier circulars IRDA has deferred the effective date of implementation of Ind-As in insurance sector in India till FY 2020-21;
- IRDA has clarified that IASB “The International Accounting Standard Board” is still in process of amendment of “IFRS 17: Insurance Contract” due to operational complexity and implementation challenges raised by various stakeholders.
- Initially IASB had aimed to amend the IFSR 17 by mid of 2020; but due the challenges and complexities faced by various stakeholders; the board will require some more time to properly frame an IFRS which should be in interest of all stakeholders and also challenges free.
- In India, the equivalent Ind-As of IFRS 17 is yet to notified by MCA, as MCA is planning to issue Ind-As once the IASB has issued a final and amended version of IFRS 17.
- IRDA has of view that implementation of Ind-As 104 and Ind-As 109 before the implementation of equivalent Ind-As of IFRS-17 may cause volatility in financial statement due to assets and liability mismatch. So, the effective date of implementation of Ind-As in insurance sector can be decided once the final IFRS 17 has been issued by IASB.
Impact of this Circular–
- Now after this circular the insurance companies will not require to submit the Proforma Ind-AS Financial statements on quarterly basis which is in addition to their financial statements as specified by the IRDA.
Our Comment–
- This circular will definitely give relaxation to the insurance companies from additional reporting requirement which was of reporting of Proforma Ind-As Financial statements. After this circular, all the insurance companies will more focus to increase their business, which will definitely contribute positively in the GDP of India.
