Special Correspondent: The Insurance development and Regulatory Authority (IDRA) published the gazette of the ‘Non-Life Insurers’ Solvency Margin Regulations, which is in the regulations.
10 types of assets including initial cost of company formation, unpaid premiums, furniture, software, stationery, etc. will be considered as zero value in the valuation of assets of a life insurance company. That is, the value of these assets cannot be shown as the total assets of the company.
With such a provision, the government has published the gazette of the ‘Life Insurers’ Solvency Margin Regulations, 2024′ . 6 regulations and 3 schedules have also been attached to this solvency margin. Earlier, the gazette of the ‘Non-Life Insurers’ Solvency Margin Regulations, 2024′ was published on October 15.
Regulation 3 of the Life Insurance Solvency Margin has asked every life insurance company to prepare a valuation statement of assets. Regulation 4 has asked to prepare a statement of the amount of liabilities. Regulation 5 requires the preparation of a statement of required solvency margin and solvency margin. Regulation 6 prescribes the solvency ratio of non-life insurance companies.
The asset valuation statement for life insurance will include-
Cash and cash equivalents; Government securities (fair value or market value, whichever is lower); Fixed deposits (amount recoverable); Investments in shares (fair value or market value, whichever is lower); Mutual funds (fair value, net asset value and market value, whichever is lower); Debentures/bonds (fair value or market value, whichever is lower);
Other securities (fair value or market value, whichever is lower); Investments in immovable property – immovable property (purchase price, or fair value, whichever is lower); Other tangible assets (lower of cost, depreciated value or fair value) and policy bonuses.
The following assets will be considered as nil value:
All loans not recoverable; Non-recoverable advances; Furniture, fixtures, dead-stock, software and stationery; Prepaid expenses; Profit and loss account reconciliation balance; Reinsurer’s outstanding balance for more than 6 months; Initial expenses for formation of the company; Intangible assets;
Unpaid premiums not collected within 3 months or till the return is signed by the auditor under section 32 of the Act, whichever is earlier; and Agent’s balance not adjusted till the return is signed by the auditor under section 32 of the Act.
