The Insurance Regulatory of Development Authority vide Circular dated 15-06-2022 has issued clarification regarding Accounting of Premium, claims and related expenses on estimation basis. It is clarified that for the fourth quarter ending on 31st March, where the statement of accounts has not been received in time, the premium, losses and related expenses may be accounted on estimation basis. However, in estimation of the said income and expenses, the reinsurers shall ensure that:
- Consistent methodology is followed across the entire portfolio;
- The estimates shall be trued up as actual values emerge;
- A statement shall be included in the annual report stating total premium, claims and expenses accounted for during the financial year and premium, claims and expenses accounted on estimation basis;
- Complete disclosure shall be made for three years (including the current Financial Year) giving the segment wise break up of premium, claims and expenses accounted on estimation basis and its actual experience as per the attached formats – Annexure 1 and Management’s comments on variation, if any, beyond 10% on a yearly basis under Notes to Accounts if the actual figures are available at the time of closing of books of accounts for the said financial year. In case of the information not being available, the above referred submissions shall be made in the annual report for the next financial year; and
- If the actual figures are not available at the time of closure of books of accounts for the financial year, any deviation beyond ± 10% shall be reported to the Authority in the format referred in above para 4(d) within 15 days from the end of first quarter of the next financial year.
This circular is effective from financial year 2022-23 onwards.
