IRDA (Actuarial Report and Abstract) Regulations, 2000

26 THE GAZETTE OF INDIA : EXTRAORDINARY INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY NOTIFICATION New Delhi, the 14th July. 2000 l,P ART Ill-SEC. 4] Insurance Regulatory and Development Authority (Actuarial Report and Abstract) Regulations, 2000 F. No. IRDA/Reg./7/2000.- c-/n l.!:rercise oj rht• pnwe1:1 rnnferrerl hr clm,_1(' (.~) <?f.1ub-sec1io11 (2) of sec/ion I 14A of the Insurance Act, I 938, (4 of /9.1~). tlte Authority. in c·1111rnlrt1tum w11h tlw /11.rnrance Adv,sory Committee, hereby makes the following regulmum.1. 11m11ely·- 1. Short title and cum111encement.-( f) These regulations may be caJled the Insurance Regulatory and Development Authority (Actuarial Rcpon and Abstract) Regulalions, 2000. (2) They shall come into force from the date ofthc1r publication in the Official Gazette. 2. Definitions --In these regulations. unless the context otherwise requires -- (a) "Act'' means the Insurance Act.. 19}8(4 of 1938); (b) .. Authority" means the Insurance Regulatory and Development Authority established under sub-section (J) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 ( 41 of 1999); (c) "extra premium' means a charge for any risk not provided for in the rrurumum contract prenuum: (d) "group business" means those insurance contracts which are group policies as mentioned under sub-section (2) of section 4 of the Act, (e) "guarantees" means the renns m regard to benefits or premiums or charges, which may not be altered during the currency of the pol icy: " (0 "individual business" means ind1v1dua.l msurance contracts issued on single/joint lives; (g) "mtcr valuai1on period" means. as respects any valua11on, the period to the valuation date of that valuation from the valua11011 date of the preceding valuation in connection with which an abstract was prepared under the Act or under the enactments repealed by the Act, or, in a case where no such valuation has been made in respect of the class of bus mess m question. from the date on which the insurer began to carry on that class of business: (h) "maruriry date" means a fixed date on wluch benefit may become payable either absolutely or connngcntly; (i) "non-par policies" or "policies without participation m profits" means poUcies which are not entitled for any share in surplus (profits) during the term of the policy: (j) "office yearly premium" means regular premium (excluding extra premiums which are required to be shown si:parately) payable by the policyholder to secure t11e basic benefits under the policy in a policy year ; (k) "options" means the nghts available to a policyholder under a policy; (I) "par policies" or "polrc1es with part1c1pation m profits" means pohces which are not non-par policies as defined umler clause ( i): (m) "policies with deterred part1c1pa11on in profits" means polices entttled for part1cipahon m profits after a certam penod from the date of commencement of the pohcy, (n) "premmm term" means the penod dunng. winch prerruums are payable; ( o) "nders" or "rider benefits" means add-on benefits. which are in addition to basic benefits under a pohcy; (p) "valuation date" means as respects any valuauon the date as at which the vaJuation 1s made: (q) All words and expressions used herein and not defmed but defined in the Insurance Act, 1938 (4 of 1938), or m the Insurance Regulato1y and Development Authonty Act, 1999 (41 of 1999), or in any Rules or Regulauons mad" thereunder shaJI have the meanings respectively assigned to them in those Acts or Rules or Regulations. 3. Procedure lor Preparation of Actuarial Report and Abstract. - (1) The Abstract and Statements must be so arranged that the number and leners of the paragraphs correspond with Regulation 4. (2) The Abstracts and Statements shall be furnished to the Authority, within nme months from the end of the period to which they refer to, m accordance with sub-section (I) of section 15 of the Act. (3) Fout copies of the Abstracts and Statements shall be furnished to the Authonty in accordance with sub-section (I) of section 15 of 11,e Act. and one of the four copies so furrusbed sp.all be signed by the persons as menuoned m sub-section (2) section 15 of rhe Act. (4) There shall he appended to every such Abstract and Statement- 'mltcfiT"{T31"q".(:~ 27 (a) a certificate signed by the pnnc1pal officer that full and accurate particulars of every policy under which there is a liability. either actual 01 contingent. has been furnished to the appointed actuary for the investigation: and (b) a certificate signed by the appomtcd actuary wirh his remarks, 1f any. to the effect that:- i) the data .fomishcd by the principal officer has been included in conducting the valuation of liabtlities for the purpo~e of anvesuga11011: 11) reasonable steps have heeo taken to ensure the accuracy and completeness of the data: iii) he has complied with provisions of the Act. 1v I he has complied \\ 11h guidance notes issued by the Actuarial Society of India with the concurrence of the Aurhorny, v) 111 lus up1111on. the malhemaucal reserves are adequate to meet the msurer's future corrumtments under the contracts. and the policyholders' reasonable expectations. 4. ~equiremcnts Applicable lo ,\bslract and Statements.-{ I) Abstracts and statements .shall be prepared separardy an re~pccr of--- (n) Linked Ousmess: (bl :--:un-Lmked Business; and (c) Ht•alth Insurance Busmess. (2) An mswe shall prepare rhe followmg statements which shall be annexed to the abstract prepared in accordance with these regulauons, namely:- (a) m respect of Lmked Busmessr (1) Form LD-1; (i1) Form LB-2: (111) Form LB-3: (iv) Form LB-4: (v) Form IA: (b) in respect of Non-Lmked Business.- ti) FormNLD-1 : (11) form NLU-2: (111) Form DD: (1vJ Fom1 DOD, 1v1 hum DD[)[), (\!I hum IA: (c) m respect ofllcahh Insurance Busmess.- (1) F111m LD-1: (1il Fn11n LD-2: (1i1).Forrn LD-3: ~ (I\' ) Form NLU-1: (v) l·orm IA. (d) Summary statcmcnts,-- ( 1) 1:mm K: ( 1i) Fnrm lRDt\-AA as specified under Regulation 4 of Insurance Regulatory and Development Authority (Assets. Liabilities. and Solvency Margin of Insurers) Regulations. 2000; (111) Form II: ( f\' ) Form I: (v) Statement ot Composition and Distribution of surplus in respect of policyholders' fund as :..pccificd under Rcgulauon 8: (3) Each Abstr.1ct shall show--- (a) ·n1e Valuation Oate.--'lhc date on wluch valuationJinvesllgation) is done; (b) New Products -A hr 1ct' ,lcscnptmn of nc" products mtroduced during the inter-valuatton period giving salient fcutmes: (c) Foreign Operation~- A h1 ,er dcscnpuon ot rhe foreign operations of the insurer. durmg the mter-valuation period: (d) Valuation Method.- A hnd desc11ption of'---- ( 1) the methods adopted III the detem1111a11on of mathematical reserves in respect of insurance products: 28 THE GAZETTE OF INDIA : EXTRAORDINARY [PART ill-SBC. 4] (11) the method by which age at entry. premium term, maturity date, valuation age, period from the valuation date to the matunty daie. have been treated for the purpose of valuation; (iii) the method of allow1Dg for- ( I) 111c1dence of premium income: and ( 11) premiums payable otherwise than annually; (e) Valuation bases.- ( 1) Valu:mon parameters used ID the valuation shall be furnished in the manner as specified in the table hereunder:- f)cscnpuon Mnrtalil) Mnrh1d11y lntlouun lr11eres1 Expenses Future Olhers Remarks ha,1s hasi, u,cd nnc Rate bonuses, please 11..:d 1fany specify (I) (2) (>} (4) (5) (6) (7) (8) (9) (a) ln,urancc l'roduc1: 1) Regular l'rcm1um 11) Smglc prc1mum uml hilly paid u11 111 I RccJuccd l'a11I up (h) lm,ur•nn• l'roduc1: 1) Regular l'rcm111m 11) ~mglc premium and l·ully pall! up 1111 Reduced l'a,ct up (ii) Expenses related 10 premiums, sum assured, annuity, etc., and per policy shall be specified separately under Column ( 5 of the table: (iii) Items such as tcrmmal bonus. m case ofw1lh profit contracts, management charges, etc., m respect of linked busmess, shall be specified under Column (8) of the table; (I) Other Adjustments (Pro\isions).- fhc methods by which provision, if any, has been made for the following maners. includmg a statemen1 \lfbases wherever necessary,- ( i) Policies m respect of wlm:h extra premiums have been charged on account of underwriting ofunder- (ii) (iii) ( iiii) (i1v) averagc ll\e~ that arc s11b.1ec1 to extra nsks such as occupation hazard, over-weight, under-weight, smokmg history, health. chmauc or geographical conditions: L npsed pohncs not mcluded 111 the valuation but under which a liability eltists or may arise; Op11ons arn1lable umfrr 1Dd1V1dual and group msurance policies; Guarantees available to md1v1dual and group insurance policies; The rates of exchange at which benefilS ID respect of policies issued in foreign currencies have been converted 11110 Indian Rupees and what provision has been made for possible increase of mathematical reserves ar1s111g lrom furure vanat1ons ID rates of exchange; (g) Further lnformation.-The followmg mformauon shall be appended:- (i) Returns on Assccs as spec1f1ed under Regulation 5; ( 11) 01str1bu11on of smplus as specified under Regulation 6; ( iii) Pnnc1ples adopted 111 d1stnbuuon of surplus as specified under Regulation 7; (1v) Neg:iuvc Reserves and Guaranteed Surrender Value Deficiency Reserves as specified under Regulauon 9: (v) M1scellaneous. 1fany. S. Returns on assets.-- ( I l The average gross rates of mterest yielded by the assets may be determined expressing the mvestment 1Dcome as percentage of 1he mean fund. [, = 2 x I / (A + B - l); where i is the gross yield; I = Invesbnent Income: A = 1he assets nt the begmnmg of the financial year, and B= the assets at the end of the financial year; lnves1ment Income (shown in the Ri:venue Account) should include the amount of the unrealised gain taken into revenue account. /\ and U have to he ad.1usted value of assets shown in the Balance Sheet.]. (2) TI1e average gross rates of mten:st. relerred to under sub-regulation ( 1), shall be furnished for each fund maintained by an msurer. 29 6. Oistribuuon of surplus. - 1 he basis adopted in the d1Smounon ot swplus as between the shareholders and the policyholders. and whether such d1stnbutton was detemuned by the instruments constituting the company, or by its regulauons or by-laws or how other.vise shall be mentioned. 7. Principles adopted in distribution of profits.- The general principles adopted in distribution of profits among policyholders, mcludmg statcmenL~ on following points. shall be fumIShed:- (1) Whether the principles \\crc dc1crm1ncd b\ mstn1mcn1s eonst11utmg the insurer, or by its regulations or by-laws or how otherwise. (it) fhc numhcr ol \C.i" p1cn1111m io hi: paid pcnod 10 elapse and other conditions to be fullillcd before a bonus ,s alloued: ( 111) Whc1her 1he bonus ,~ .illoca1cd 111 rcspcc1 of each yc:ir's premium paid. or in respect of each calendar year or year of .i~~u1;111cc or huw l>!hcm isi:. ,111d It\ I Whether the bonus ~cMs 1mmcd1a1cly on allocal!on. or. 1f not, cond1t10ns of vesting. 8. Statement of compo\ition of 'iurplus and distribution of surplus in respect of policyholders' funds.-{ 1) A stateme111. show111g total t1111011nt ol surplus arising dunng the rnter-vaJuation period, and the allocauon of such surplus. ~hall be lurmshed scpa1a1clv for pan1c1pating business and for non-participating business, wnh the particulars as menuontd belO\\ - C'ompos1uon of Surplus: (a) Surplus shm, 11 under Fonn I: (h) Interim Uonuscs patd during u1e mter-vaJuation penod:; (cl l'crn1111~I Bonuses paid du1 mg the 1nter-valuatlon penod: (dl Loyalty Addt11011s or 1>1hcr forn1s of bonuses. tf any, paid during the inter-valuation penod~ It') Sum 1rnnstcncd lrom !.han:holders· funds dunng the inter-valuation period:; (I) Amount of surplus. hum pohcybokkrs' funds. brought forward from precedmg valuation: (g) Total Surplus (total of the items (a) to ( I)): Distr1buuon of Surplus~ Policyholders' Fund: (a) To lnterim Bonuses paid: (b) To Terminal Oonuses (c) To Loyally Add1l1ons or any other forms of bonuses, if any; (d) Among policyholders with muned1ate paruc1pauon giving the number of polices wb1ch participated and the sums assured therellflder (excluding bonuses): (e) Among poJ1cyholders w1th deferred parhctpatton. g1vmg the number of polices which part1.c1pated and the sums asS1.1red thereunder (excluding bonuses); (0 Among policyholders m the discounted bonus class givmg the number of polices which participated and the sums assured thereunder (excluding bonuses): (g) To every reserve fund or other fund or accowlt (any such sums passed through the accounts during the inter valuation penod to be separately stated); (h) As earned forward un-appropnated. Shareholders' Fund: (i) To the shareholders' funds(any such sums passed through the accounts during the inter valuation penod to be separately stated); Totals (J) Total Surplus allocated: (total of the items (a) to (1)) (2) Specunen of Bonuses allotted to policies for ooe thousand rupees together with the amoun.ts apporooned under the various manners m which the bonus IS receivable, for each type of part1cipatmg product, shall be furnished. 9. Negative Reserves and Guaranteed Surrender Value Deficiency Reserves.- A brief description of treatment adopted for negative reserves and guaranteed surrender value deficiency reserves shall be fum1shed. I 0. Notes applicable to all Forms.--( I) Each Form mentioned under sub-regulation (2) of Regulation 4 shall have the following descriptton:- C-lass11icu11on: ( Jlcgory; D1v1s1on. Sub-Class: and Group.