Ref:IRDAI/F&A/CIR/ACTS/023/01/2020 Date: 21stJanuary 2020
Sub: Implementation of Ind AS in the Insurance Sector.
This has reference to IRDAI’s circular referenceIRDA/F&A/CIR/ACTS/146/06/2017 dated June 28, 2017 whereby the effectivedate of implementation of Ind AS in the Insurance Sector in India was deferred toFY 2020-21.
2. While the insurance sector was preparing toimplement the Ind AS, it was noted that the International Accounting StandardsBoard (IASB) has taken a considered view to amend IFRS 17: Insurance Contracts,due to the concerns raised around accounting treatments, operational complexityand implementation challenges raised by various stakeholders. The IASB hasindicated that they aim to issue the final amendments in mid-2020. In theIndian context, the equivalent standard of IFRS 17 is yet to be notified. Afterthe final standard (with amendments) is notified by IASB, the correspondingstandard in India will have to be notified by the Ministry of Corporate Affairs(MCA). Once the standard equivalent to IFRS 17 is notified in India, the IRDAIwould be in a position to notify the Regulations on preparation of Ind AScompliant financial statements. Several other Regulations that may be impacted dueto the implementation of IFRS 17 may also have to be modified appropriately.
3. It is also noted thatIFRS 4 shall be replaced by IFRS 17 once the final standard is effective.Hence, implementing its equivalent (Ind AS 104) in the insurancesector in India at this juncture, would involve avoidable costs and efforts. Itmay therefore not be desirable to implement Ind AS 104 in the insurance sector asan interim measure. Implementation of Ind AS 109 beforeimplementation of equivalent of IFRS 17 equivalent may cause volatility in thefinancial statements because of asset liability mismatch.
4. Against this background, it has beendecided by the Authority in its meeting held on 20th December 2019, toimplement Ind AS 109 and Ind AS equivalent of IFRS 17 simultaneously, alongwith all other applicable Ind AS. The effective date of implementation shall bedecided after the finalization of IFRS 17 by IASB. Accordingly, the circular dated 28th June 2017 hereby, standswithdrawn and the requirement of Proforma Ind AS financial statements beingsubmitted on a quarterly basis as directed in the circular under reference standsdispensed with.