Owing to the liberalization and globalization of the insurance sector, now a days insurers have huge amount of funds collected from the insured in the form of premium. The involvement of the public funds necessitated the regulators to frame regulation to make insurers properly use the freedom provided, but at the same time, through exposure norms, ensures that flexibility is not used beyond permitted levels. Thus, the Investment function in an insurance company is a trade off between liquidity and profitability within the regulatory framework.
The Insurance Regulatory and Development Authority (IRDA) has always been proactive in bringing out the relevant regulations for better management, reporting and protection of the interest of various stakeholders. The IRDA has recently notified IRDA (Investment) (5th Amendment) Regulations, 2013 which came into force w.e.f. 1st April 2013. The amended Investment Regulations requires implementation of investment risk management systems and process by an insurer shall be reviewed and certified by a Chartered Accountant as per the procedure laid town in the Technical Guide on Review and Certification of Investment Risk Management Systems and Professes of Insurance Companies issued by the ICAI.
In the backdrop of the fifth amendment to the Investment Regulations, the Committee on Banking, Insurance and Pension of ICAI (COBIP) considered it appropriate to revise the Technical Guide to bridge the knowledge gap in this vital legislation. This revised Technical Guide provides comprehensive guidance to the auditors in reviewing and certifying the implementation of risk management systems and processes as mandated by the investment regulations of IRDA.
Source- http://icai.org/
