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Half-Yearly Accounts A Must for InsurersBy ugesh sarkar, Section Business
The Insurance Regulatory and Development Authority (Irda) has issued disclosure norms for insurance companies, mandating them to publish accounts on a half-yearly basis.
The disclosure norms are seen as a precursor to allowing insurance companies to hit the primary market. According to the new norms, insurers will have to publish their balance sheet on half-yearly basis starting from the period ending March 31, 2010, ie beginning with the October-March period. Such disclosures will be necessary for all insurers even if they are not listed on any stock exchange, the Irda said. Irda said several insurance companies will be completing 10 years shortly, after which they may be allowed to go for an initial public offer (IPO). It is also essential that investors are made fully aware of the financial performance, company profile, financial position, the risk exposure, elements of corporate governance in place and the management of the insurance companies. Such data shall preferably be made available for at least a 5-year period prior to the IPO. The regulator has directed all firms to come up with a public disclosure framework to ensure a fair and stable insurance market.
Source: DNA By Nandini Goswami Half-yearly accounts a must for insurers Click on "Full Story" For More...
Gaurang Shah, managing director, Kotak Life, said, "These disclosures along with the disclosure on embedded value, which is expected shortly, will pave the way forward for the insurance industry. In a way this also accounts for greater accountability for the industry."
Irda has also said that key analytical ratios of insurance companies have to be published in at least one English daily circulating substantially in the whole of India and in one regional language newspaper. Insurers have also been asked to host all the forms including revenue account, profit & loss account, balance sheet, segmental reporting, schedules to accounts and other forms, on their websites, on a quarterly/half-yearly/ yearly basis. According to the Irda, the International Association of Insurance Supervisors (IAIS) has recognised that insurers have an equal if not greater responsibility towards policyholders than their duty towards the investors. This is because if insurers become insolvent, loss to policyholders is much more than that to investors. Public disclosures, on the risks faced by the insurers, provide information to policyholders that help them make informed decisions before entering into an insurance contract. At present, in India, it may not be possible for an individual policyholder to have necessary ability and resources to undertake the task of assessing the insurers.
However, various expert stakeholders in the market can provide necessary inputs based on the disclosures, which will help them in assessing the risk exposure of an insurer while entering into a contract with an insurer.
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