The accounting regulator the Institute of Chartered Accountants of India (ICAI) has constituted an expert group to suggest sector-specific accounting norms for insurance companies. The move aims at ensuring that financial statements of insurance firms reflect true natures of financial arrangements. ICAI president Uttam Prakash Agarwal confirmed the development. “ICAI is planning to come up with specific accounting standards for the insurance sector,”.Online GST Certification Course by TaxGuru & MSME- Click here to Join
New standards will help in making financial statements of insurance companies — public as well as private — easier for the investors to comprehend, as it will require the companies to show their fields of revenue generation with clarity, he said. These independent accounting standards for the country’s insurance sector will be in addition to the already existing accounting norms which the insurance companies follows now.
The insurance regulator, Insurance Regulatory Development Authority (Irda) has directed all domestic life insurance companies to tighten their expenses in order to procure durable business. This move came after reports surfaced that insurers are making disproportionately huge commission payments to their intermediaries, other than individual agents. This, in turn, affects the overall financial strength of the companies.
The definition of related parties to intermediaries should be conformity with the accounting standards of ICAI and Companies Act. The regulator has also stipulated that the information certificate given by the company to the regulator should have signatures of the insurer’s chief executive officer, the chief financial officer and the compliance officer.