IRDA(Assets,Liabilities and Solvency Margins of Insurers)Regulations,2000

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- 0 INSURANCE REGULATORY AND DEVELOP~1ENT AUT80RITY NOTIFICATION New Delhi, lhc 14th July, 2000 insurance Regulatory and Development Authority (Assets, Liabilities, and Solvency Margin of Insurers) Regulations, 2000. F.No. IRDA/Reg/7/2000.- /n exerc:isl! 0/11,e powen cm1f,•rrc1! IH· dm,_,<•., (\·). (2) (111(/ (Z<t) uf~,·ub-sf.'Clio,, (2) of section I 14A tJ/ the Insurance Au. I !138, 14 of 1938}, read u·rtlt \\,cnmr 26 of t/1(• fnsurtmce R(..•gulatory and Development Authority Act. /999 (41 of f'J!Jr.)J, !ht• lwlionn· m umsulrmimr wrt/J rhe /11.wram.·e A1/viso1y Committee, hereby makes thi! following regu/1wm1s, 11t11ud1-. - I .Short title nnd ('Ommen cement.--( I) These regulations may be called the Insurance Regulat()ry and Developmcrn Autliority {J\sse:ts, Liabilities, and Solvency Mar.gin of Insurers) Regulations. 2000. (2) They shall come into force frorn the date uf their publication in the Official Gazene. 2. Definitions.-( I) In tl1csc rcgulat1011s, unless ,he context olheiwise requires---- (a) "tlo" means 1he Insurance /\ct, 1938 (4 of 1938); (b) "tl11tlu•ri11:· means the Insurance Regulatory and Development Authority established under sub-section (I) ,1r s~ction :, nf the Insurance Regulatory and Development Authority Act, 1999 (41 or 199'1); (2) All words and expressions used herein and not defined but defined in the Insurance Act. 1938 (4 o f 1938). or in the Insurance Regulatory and l)evelopment Authority Act, 1999 (41 of 1999), or in any Rules or Regulations made thereunder, shall have the meanings respectively assigned to them in those Acts or Rules or Regulations. J. Valuation nf Assets.--Evcry rnsurcr shall prepare a statement of the value of assets in Form IRDA- Assets- AA in accordance with Schedule I. 18 THE GAZETTE OF INDIA: EXTRAORDfNARY [PART lll-Ssc. 4 I 4. Determination of Amoun1 of Liabilities.-Every insurer shall prepure u statcmcnl of the amounl of liabilities in accordance w1lh Schedule ll-A, in respect of hfc insurance business, and in Form HC, in accordance with Schedule 11-8. 1n respect of general insurance business. as the ca.~e ma} he. 5. Detennination of Solvency Margin.-Every insurer shall prepare o statement of solvency m,11g111 m accordance with Schedule Ill-A. in respect oflife insurance business, and in Form KG in accordance wnh Schedule 111-8, 111 respect of general insurance business, as the case may be. 6. lle:11th lnsurancl' Business. - Where the insurer transacts hcallh insurance business, prov id mg health cu, crs. the ,unount of liabilities shall be determined in accordance with the principles spccilicd under lhesc Rci;ulations. 7. Bu~iness oul~ide India.- Where lhe msurer transacts insurance business ma country outside lmha and ~uhmns stalc111ems or re1ums or any such particulars to a public authority of that country. he; shall enclose the same along with the Fonns specified in accordance with these Rcgul.1l1011, .1111.J the Insurance Regulatory and Development Authority (Actuarial Report and .-\hstralt l Rcgul;it1011s, :!000. Pr<1\·1dcd th~I If the "ppo1111ed acLuary 1s of lhe opinion that it is necessary 10 set additional reserves o,cr and ahov.: 1hc reserves shown m the statcmentS or returns or any such particulars submitted to lhc publ,c authorily of a country omside India. he may set such additional reserves. 8. Furnishing of Forms.--- The Forms. namely, Form lRDA- Assets- AA . Forni HG, and Form KG, sh,111 be furnished separately for Business within India and Total Business transacted by the msun:r 9. Per,onal , bit ot appointed actuary to the /\uthori1y.- The Authority may. if considered ncccss.iry ,111d .:~pcd1c111. ask 1hc appo11ned actuary to make a personal visit to the office of the Autho11ty 10 elicit frnm h11n :111y further information. I I r 19 Schedule I Y ALUA TION OF ASSETS (,ee Reg-ulcrtio11 .1) I. lntotprcia1lon. In 1l11s Schedule, unless the context otherwise requires, ·oon-mandaled investmcnL<' means those iilvestments c.ha1 are neither approved secunues nor approved investments. 2. Values of Assets.-{ I I The tollowmg assets should be placed with value zero,-- (a} Age111's baJances and outs1ond1n~ premiums 1n India, 10 the extent they art not realised w1tl1in a penod of lhirry day~: (b) Agents balances and outstandm~ premium~ outside I nd,a, to tlie exien1 tlley arc no1 realisable ; (c) Sundry debts. to the ex1en1 they- are not realisabk: (d} Advances ofan unrealisable cbaracler; (e} furmh!fe. fixtures. dond srock end stntionery; ( f) Deterred expenses; \S) Profit and !O"-< appropriation account balance and any ficmious assets other than pre-paid expenses; (h) R.cmsurers balances outstnndins for more than three months: (1) Prclinunary expenses m the formation of U,e company; (2) TI1e value of computer eq111pmcnt mclurling software shall be computed as under:-• (1) scvcnl)' five pc.r cent. of !IS cost 1n the year of purchase: (ii) fifty per cent. of it~ cost in Lhc second year: ( iii) twenty-five per cent. of its cost m the 1Jurd year, and (iv) zero per c1;;nt the.rcafter. (3) AIJ other llssclS of an Insurer have ro be valued in accordance with the lnsuranct' Regulatory and Development Authori1y (Prcparauon of Financial Statements and Auditor's Report of lnsurnnce Companies) Regulations, 2000. 3. Statement of AsseL,.--Ev.:ry Insurer shall prepare a statemeni of assNs m F0rrn !RDA-Asset~- AA. l 20 THE GAZETTE OF IND]A : EJO'RAORDJNARY Form IRDA- Assets- AA (Sec Regula1:011 3) [PAR'!' 111- SEC. 4) INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (ASSETS. LIABILJ'I1ES, Al\'D SOLVENCY MARGIN OF INSl!RERS) REGULATIONS. 2000. Sun<.'.mcnt uf Assets as at J J ~, March,20_ Form Code: I ]f ][ ][ JI ]( H ][ ][ J I Name of lnsmta•; R~g1s11atma Number: Date oi rtgISll'at1011: ___ _ _ Classificmion4 ilu::1ness W1l11m India/ Toto) I3us1ness . hL"m Category of Asset Policyholders' funds: Sharehol<lcrs' f1111ds: No. Amount ( in rupees A n1ount ( in rnpee~ ( I) (2) lakhs/ lS per(~) bdow lakbs) 3s per (a) below (3) (4) OJ Approved Secunt1cs 02 Approved I n.vcs:rt1.1.":Jll~ . 03 Ucr os11s 04 Ncm-Mandated lnve.srmems 05 OLher Assets. specuy 06 Total 07 Fair Value Change Account 08 AdJUSttd Value of Assets: (b). (7) . I tcrnfy that 1hc statement has bee11 prepared m accordance w,th Schedule l Place Oate Name and Signature of Appointed Acruary. ( in ca.se of a hfc insurer) I Name aud S,gnarure of Audiior ( in case of a g<'neral illSurcr) 'Notes: The statement shall sho,v rhe value of the ab<>vc-niemion¢d categories of a.•;;.~ets m accordance with Regulation 2 in Scheclulc L C ['ll'l lll-~ 4) ',1«f <fil -o= : ~ Schedule U-A V:ilu111ion of Liabilities - Life Insurance /See Regularwn 4) l. luterprctotion.-ln tl11s Sd1cduk. - (a) .. valuation date", in rc1auon tu an ac1unnat mv-cstig_alion, meani:; the.date to which lhc- mvcst1gat1011 relates. 21 tb) ··universal l11C i:ontracts"' meam, those con1ractS that are presenied man unbuat.J1cd form. llre contracts wher~ policyholders h.-·c un ,ip110 11 10 in,·c,1 m unn, of insurer's segregated rimd(s) shall be rrea!ed as "hoked husmc,s": and others shall be u·eated as ··non-lmked business". (c) .. ,egregatcd funds" means funds earmarked m respect of linked bU1'inc.sS. 2. Method of Determination of Mathematical Reserves.-{ 1) Mathcmallcal Res•rv•s shall be de1ermincd separately for each conrract by a pn>spccttve method ofvaluanon m accordance with sub-parns (2) 10 (4) .. (2) 11,c valuation method shall taKe 1010 account all pcOSJX'CUve conungencies under which any prcmiu= (by 1hc rolic,•holdcr) 0 1 b<:ndits (to the pohcyholdcribcndiciary) m,y be payable under the policy. as detemtintd by 1he policy cond 111\llh, ·11,c ltvcl ol benefits shall take 1010 ·account the reasonable cxpcc1a11ons of policyholders (wHh reynrd 10 l1l,1111..,,,, rndudmg termin:d bonuses. 1f any) and any esrnb1ished pracuce-s of (tO insurer for pa ymcm of hcncl 11s. (3) The v,ilua1ion mctliod shall t-ake 11110 account the cost of any oplions that may be avaclablc IO 1he policyholder 111\der the tcm,s nl the conrract. (4) 11,e de1erm1na11011 <1f 1hc amou111 of liabili1y under each policy shall be based on prudem assumpuons of all relfvaal panuneters The value ol e.ich such parameter sh-all he based on the msurcr's expected expencncc and sh:ill include ao appmpnatc margm tor adverse dc,•13.uons (hereinafter referred to as MAl)) that mJy result Ill an 111crease m ll1c ~unoum of maLhcmauc~1I reserves. ( 5) { i) 1l1e amount of marhemaucol reserve ,n respect of a policy, deternuned in accordonct with sub-para ( 4 ). may he negative (called .. negative reserves") m less tbao the guaranteed surrcmlc.r value a\':ulnbJc (called "gu~ra111eed surreoder value dt·l1<:1cncy reserves··) at lhe va1uarion date. (ii) The appointed actuary shall, for 1hc purpo<e of section 35 of the Act, use !he amount of such marhemal!cal rtse,ves without ·Juy mod1fica110n: (1ii) ·n,e nppointc<l.a(ru:uy shall. for the purpose ofsecuoas 13. 49. 64\I and 64VA of the Act, ~ct th~ amount of such mafhematical rcst:"rve 10 1.cro. in t3St of such negatii.•e reserve. or to the guam.nteed surrender value.. m case of such guaranteed surrender v::ilue deficiency reserves, ns the case may be. (6) The valuation method shall be called "Gross Premium Method', (7) If ,n the opimon of th< appoin1cd ocma,y, a method of valuation 0Ll1cr than 1he Gross Prcmmm Method of v:duation ls 10 be :.idop11.:d. 1hen. other approxim~iQns (e.g. rcuospectivc mc1.hod) Jr.ay be used. Provided rhal die :1111011111 ol calculated reserve is cxpctted to be atleoSl equal l<J 1he omounl that shall be produced by the apphcauon ol uro,s Premium :Vlethod. (8) l11e method ol calculatton of the amount of liabilities and the ossumpuons for the valuation parameters shnJI not be sub,iect tq arb1Lrary disco111urn1tH.::=, hom one year to the ntxt I 22 THE GAZETTE OF INDIA : EXTRAORDINARY (PART m-Ssc. 4] (9) TI1c dcterm1nauon of the amount of math,,matical re.serves shall take into account the nature and term of the assets reprcseiumg those liab,hucs nnrl the value placed upon them and shall include prudent provision agamst the effects nf possible fonuc d,anges in the value of assers on the ability of the msurcr to meet its obligations an smg under pohc1cs as 1111:y arise. 3. Policy C ash Flows.-- The grOS$ premium method of valuation shall discount the fol1Qw111g future polocy cash flow_.. at an approprmtc rate of rn1crcst,•-- (a) premiums payubk. ir .,nv, benefits payable. 1f any, on dca~1: benefits payable, if any, on survival: benefits paynbk. ,r :ny. nn v11!uruary rcnn111ac1on of contract, and the followmg, if any, ·- (,) has1c henetirs. (11) ndcr henclii.. 1111) h~nuscs 1ha1 have already been vesied as at the valuauon dare. i 1\ J honu~t•::i. as a.rcsuh of dte valuo1ion 0.1 the valuanon da1e, ond (,) fmurc bt,nuse~ (one year after valuation date; including te.m,111..11 bonuses (t:\H1~1s1cn1 w11.h Lhe v~luauon rate of mtercst); (hl c11mn 11ss1<>11 ,ind rcm11ncr,111011 payabk. 1( any. in respect of a policy (This shall be based on the current practice di° tht: lll'iUrctl \_=t1 ,1llow::1111:i: :,;hall be marie for non .. paymen1 of comm1ss1ons in respect of the orphaned pul1l~1cs: 1d ro!Jc~ m;umcnanc-c:- t'Xpc.·nsL"s. 11° au\.. m respect of;) poJicy, as providc:d under sub•parn (4) of para 5~ (d) allocai1011111' pmti1 to shmdiui<lcis, 11 any, wh<rc diere IS a specified relationship between profits attribuuibk to ,hareholdcrs a11d 1hc honus rn1cs,Jedmed for policyholdt'rs. l'ct.wu.lc:-d Lhat allowa.11cl' mrn,1 h~~ nwdc lor tlX. if any, -l. l'olicv Opiiou,. -Wh,·rc ., pot,~y prorules bu,h-111 opllon,, that may be exercised by the pohcyholdcr, such us convfrc.1011 01 ..sd<l1111\11 ol <.:ov,rr3ge 0.1 luturc darc(s• without any evidence or good health, arutuity rate gu:1rar1t1..•c~ JI ma1ttrity ol con1ract. etc,. the costs of such opttons s.hall be c.strmatcd and trc.atcd as speciaJ cash nnw::- m cah:ula11n~ 1h.: 11\alhcm:mcnl ,e~crvcs. S. \/~1lu~1tion P:1r:111teter~. ( I) rile valuation p(1f:Jmeters sh:::ill constitute the bases on which the future policy cJsh flow~ ,hall he ,-0mp11re<l and d1scoumed L:ach pamrnetcr shall have to be appropriate to rhe bloc~ uf h11.~111e):.$ 10 hL· vnlue<l .A.11 .ipponuc-d acmary shall r~ke into cons1dcrnt1on Lhc followil'ig.,- 1_'1) n,c ,·ah1c1,J 111' th,· pnramcter shall be based on the insurer's expcncnce study. where ava,lablc. If rL"l1:ible t>!\p<:.·1-i..·1u.·c s111dy 1s. not :1v:111:lbk . the value(s) crut be based on the uic.luslJJ 'illldy. if available and npp1opnate. If th:1ther 1s ::ivailablc. the valut!s niay be b::iscd on 1.he base::; 11sed for pnc,ng the prrullic; In '-'.\1anl1..;h11H! 1he <.·xpcc1t~<l 1¢\'l!I ul' ony paramet~r. any likely dctcnorat1on lD the cxpenencc ,hall bL· 1aki:n m10 :ll.'C(luJH: (hi I he cxp,·c,ed levd. os ,ktcmnncd 111 clause (a) -Of this sub-para, shall be aqjustcd by :m appropra3tc \.brgm tor Adn;isc D<.•\r1a11ons (MAO), 1hc leveJ of MAD being depcoclc1n on 1hc degree of confoknce 111 the <.'Xpc,·tcd Jevcl. :uul s11d1 :>,!AD in each paramclcr ,hall be based on the G mdance Notes issued by the AcmarmJ Soc:1c1y or fnd1a. wuh the concurrence uf the Authonty {..:) The \'illut~ used tor rhc \'t111ous valua11oa parJmetcrs should be cons1ste1lt among themselves. (1) ;\Jortalil~ rnu.·s tc1 be U~l·d shall ht" hv 1cforcnce to .a published table, unlcs~ the insurtr ha.~ ..:onstructcd u separate iablc hascd 011 lus own i:xpc, 1e11c.'.c: P1 o, 1dcd that su('h pubil~hl.'d ta hie shall bl' m:ide ,lVailablc to 1he insurance rn<lustry by the Actuarial !-,oc1(.!ty of Jnd1a. •.v11h 11te concurrence ul the Authori~y. 1•rnv1clcd further 1hnc .sutl1 r.11(:s det<W'Jtmcd by reference to a publishc<l tablc shall not be less than hundred J)t:1 L·cr:L of 1hat publtshcd ta hie ['ll'Tlll-=4J Provided further that such rnres dcterrruned by reference 10 a published table may be less than huodrec! per cent. ol that pubhshcd rable if tbc appointed act11ary can ju~ify a lower per cenL \ Ji Morhidilv rares to be used shall be by refereotc to a published rable, unless the insurer bas constructed a sc:parnte tabk based on his own experience· Provided that such puhhshcd rnhle shall be made available to the insurance industry by the Actuarial Soc1c1y oflnd,a. with the concurrence of the Authority: Provided further 1h01 such rares c!e1em1111cd by reference to a published labk shall not be less than hundred per cent. of rhnt pub I ished rable. l'rov,ded forthc1 1ha1 sud, r:<1cs dcternuncd by reforence to a pnblished table may be less than hundred per cent. ot tlm pttbh,hed rahk ti th,· appouned actuary can JUStify a lower per cent. (4) Policy nrninlcnance expenses shall depend on the manner. in which they arc analysed by the insurer. 1·1.:. fixed expenses :,nd v.inable cxpcn.ses. The variable exp1:nses shall be relnred to sum assured or prcmmnt.~ <,r bi.:m:tns. The fixed t:xpcnses may be related to sum assured or premmms or benefits or per policy L-..xpcnscs. All i.'Xpl·nses ~hall be increased in future years for tnflation, the rate of inflauon assumed should be cons,stcm with the v~lualion rate or interest. (5) V;1lualion ,.,1es of intcrcsr. ro he ustd by appointed actuary - fu) shall be not iti~he1 rhan 1hc rares or interest, for the calculation of the present value of policy casb llnw$ rctcrred rn 111 purn 4. detennmcd from prudent assessment of the yields frorn cx,snog assets 01111 butahk 111 blucks of I, fr insurance busintss, and the yields wh1cb the msurer ,s expected 10 ob tam from the sum1 ittve~wd tn rhe c\,turt. and such assessment shall t.tke irno account-· ( i) thl' (.'1,111po,;1rwn 1•1 assets supporting 1he hab1l1t1cs. expected cash nows from the uwcshnents "" lt.11111. 1lw ,·a,h llows frorn the block of policies to be valued, the likely future investment 1..nn1 l11 mn<i and 1hc reinvestment aod disinveshnent straccgy to bt employed 1n dealing with 1h1.: l'ut111't nc.:t c.1.-;h Oov.•s: (u I 1he ns.ks: assoc,atcd wnh investment in regard to receipt of mcome on such investment or ll'payment ol prmc1pnl: ( 111 t tli...· <!'<p~n::it:.s. associated wuh the 1nves1mcnt functions of the insurer: (h) ,;hall no1 he lu~ht'r th:111, fr)r thl· calculariou of present valut of po1ic}' cash llOV/S in respect of a p;:J11 1c:ular \·~k~t•1 \ ,,, \ n1t11 :.1i:I:-.. the yields on as~ets m:untained for the purpose of such category of ~·ont.tcl~. (t.: J m IL'":-.pt'"a:1 \II 11t111~p~m1c11t;11u1!! hw;mess. shall recognise the nsk of decline in tbe future in1erest rates: HII Ill 1~:;pc:i:1 01 pa1nc1pa1111g husmess . slmU be based on the assumption (wich regard to futur<: investment l'o11d11wns), !ha1 1lh.· ~cJlt.· nl fur\lu:. bonuses used 111 the valuation is consistent \t1irb 1J1c valuation rate 111 nlti:n.-~1. :rnd 1c) 11~ rc~pl"Cl nl ..;1ugll! prL·mmm busmcss. shall take 1mo accounl the effecl of changes m the risk-free llllL"fL'St nltes. ((,) Or her pnramcrcrs. may be wkcn ,mo account. depending on the type of policy. In establishing the \ <1luc~ nr ~uch p,namclcrs. the co11stdcrauons se, ou1 in rhis Schedule shall be taken imo account. 6. Applicobility lo Relnsur:mce.-<.1} Tlus :ichedule shall also apply to the vaJuauon of busmcss in the books of remsurtrs. I 23 I 24 THE GAZETTE OF INDIA: EXTRAORDINARY (PART Ill-SF.c. 4] (2; As rcgnr<ls 1he busmcss ceded by rnsurers. this Schedule shall be applicable to the net sums at risk re1ained by lhc insurer. ( 3) Reinsurance arrangenwnt w11h :,n element of borrowing m the form of deposit or credit of any kind from msurer's remsorers wJLhout the prt◊r approval of the Authority shall nor be created as crcclit for remsu.rancc for tht> purposi: of tfotcrmmauon of required solvency nuugm. 7. Additional Re4uireme111s fo1· Linked Business.-< I J Reserves m respect of linked business shall consist of t\\·o componcnt'i, namely, unit rescJ'\'l'S :md _gt!ni:ral fund re.serves. (2) Umt reserves shall be rak·.ul.:ucd 1n rcspccl ot the units 21Joc:31ed to lhe policies in force at lhe valuation date u~mg unH values 31 the., ... ,·aJuauon dale. (3) General fund ,eservcs tnon-~r.:t rese,ves) shall be cictermmed using a prospective valuation method se1 ou1 in 1h1s Schedule. which shall take 11Ho accow,t of the fo!Jowing. namely:• (aJ prenuums, 1fany. payable in future; (b) death bencli1s, if any, provided by the general fund (over and above the "alue of urt,ts): (c) managcmcn1 charges patd to the general fund; (d) guarantees, if any. relaung 10 surrender value.:; or minimum death and maturny benefits; (c) fund growth rates and management c.h:uges. (The values of Lhcsc parameters, along \Vtlh othe./-s. shall be determmcd m :u,cordauce with para 5): { f) negative reserves, ,f any. shall be dealt with m accordance wi1h sub-para (5) of para 2 8. Additional Re4uirements for Provisions.- l11c appointed acruaty shall make aggregate provisions in respect of the followrng, where it is 001 possible 10 calcula,e ma1hematical reserves for each policy, m the detemiination of mat.hcmatic2I re~erves:• ( a) Pohc,es m respect of which exrra premiums have been charged on account of underwriting of under-average lives. chat arc sub;cct to extra risks such as. occupation hazard, over-wdghl. liLldcr-wc1ght, smoking his·1ory, he31 Lh. dimalic or geographical conditions, (I,) Lapses policies n01 mcluded 1nthe ,•a!ualion but under which a liability exists or 111ay arise; (cl Options u,•ailable under rnd,vidual and group iosurnnco policies: (d) c;uaramees available to 1111:imdual and group msurancc policies: {e) The ratl.!S of exchange ut \vh1ch benefits m respect of policies issued m foreign currende~ have b-ecu ~oavertc<l 11110 lnd1an Rupees .. 1.ml wh3t provision has been made for possibk. increase of mat1,cmat1cal n:serves ansing from future variations in rates of exchange: (0 Other.ifany. 9. Statemen1 of Liabilities- An insurer ~hall furnish a statemen1 of liabilities m accordance with the fnsurancc Regulatory and Ocvclopmcnl l\mhonty (Actuarial Rcpon nnd Absrract) Regulations. 2000. ! 25 Schedul.e 11-B !See Regr,lation 4) v~1luation of Liabilities (General insurance) 1. lnterpretation.-ln tlus schedule.-•·- (-n) ' 1R<',\ l'l'\'c' fin· d111ms 111cmTed hut ,u,1 n.1pm·tc:d (IBNR"'J mean~ the reserve for clauns mcurrcd but not reported on the balance ~heet date. and mclutlcs rcset'Ve Jbr cl~tms wltjch may be inadequately reserved: (b) ''l?e~erve fi,r mwumdmJ: dwm.\" means Lhe reserve for outstanding t1aims as menuoned m para 2{ 1 J(b}(in) of this Schedule: 2. Determination of' Li:1bililies.-( I) An insurer shall --· (i) place a proper value in ,espect of the following Hems. t\amely:- (I) p1 nv1::.wo l~.\f Ii.id :in,1 ,tuubtlul ,lth:s. {In 1t.:SCl°\'C thr th\ ulcnds lkdurel.l or n:Corrtn-.:11dcrl. and ovr,St:mdms dividends 111 full. (Ill} amoun1 due; h> 1nsuram:<: cmnp::in1l'.:- 1:ar:y1ng on msuronc.c busmcS$. m fuU, {IV) ;u)lOUnl due tl> , \m<lry i:rcthlo~.111 lull. ( V) (lfM1Smn lurtax:11mn. in full. ;.uld (VI) forCJgn .:xt:h:i,igc tl!'st:rvt' (ii) detemttne the amoum of following resctvcs, 111 Lhe manner specified herein below for each reserve:- (a) reserve for unexpired risks. shaU be, m res-peel of,--· (IJ F1tt' bu:>111<!-l>i>, :m l)(f Cl!lll. (II) M 1scell~nC(IUS hu:frness. 50 per <:~t\t, (Ill) M:mnc b\lsmcss. ('lthcr 1han m;iri1,e hull bus1nc:ss. SO rc:r cc.nt: and (IV) ~Ian~ huU husmc~. I OU pc-r t:cn1. of the premium. net of re-insurances. 1 cce1ved or receivable dunng the preceding twelve months~ (b) reserve for outs tanding claims shall be determined ut 1be following manner:- {I) 1vhen: the :ur«,mu~ (!I (,u1:-;.-in<hng c1:1,~ 111 the msurc1s o.re known, 1h..- amount •:i co be pro\'1ded in full; (11) where lhi, ;11tx1\111l~ ~11 (l\1l:>t:.1nJmp, d:um., c.in be n:aso1H\bly c:.11mated accurdll'lg tO 1hc mi;un::r. ht rmy follow 1he '.:.-:...,;c: by cas<.1 me1hod' :iltcr toking. inlo {ICCOllnt 1hc explic11 Jllow::mct lbr cha"gcs ,n the scJtlemel'll p;it1em or .:ivcrag.e ct:um ..tf'l:~unts, expenses and mrfa1mo: (c) reserve for claims incurred but not reported (IDNR) shall be detennmed usmg actuarial prtnctples. In such determination, the appointed acmary shall follow the Guidance Note.s issued by the Acmanal Soc1ely of India, w1tl1 1he concurrence oftltc Autl1oriry, and any directions ,ssued by the Authority. tn this behalf. 3. Statement of Liahility.--Every general insurer shall prepare a statemenl of liabihtic.s m r-orm liG. certified by an auditor approved by lhe Authority 10 accordanccwith Secuon 64V of the Act, and also certified by us appomte<l actuary m respect of LONR reserves. The statement shall be furmshed to the Aulhority along with lhe returns mentioned in section l:i of rhc Act. I! I 26 THE GAZETTE OF INDIA; EXTRAORDINARY [PART Ill-S.c. 4] Form HG (See Regulation 4) Insurance Regulatory and Development Authonty (Assets, Linbilities and Solvency Margin) Regulation, 2000. TABLE I-STATEMENT OFLIAnlLITIES as at 31" March, 20_ Form Code: [ J[ ]l ][ J[ ][ ][ )[ ][ J Name of Jnsurer: Regostrarion Number. Date of registration: _ ___ _ Classification: J3usmcss Withm India/ Total J3usincss Item No. Descriprion Reserves for Reserve for IBNR Reserves Total Reserves unexpired risks Out-.standiog C!uims (I) I c2i. (3) (4) (S) (6) 01 Fire 02 Marine Suh c/a.\·s: Manne Corgo Manne Hull - 03 Miscellaneous Suhdns.,·. Motor Eng1neerU1g Avrntton L,abilines Rural insurance Others 04 Health Insurance 05 Total Liabilities Certification from Auditor (approved by the Authority) I certify 1ha1 the :1b<wc st;itcmcnl rc1)r(:.scn1s the liub1IU1~s of the insurer which have been determined in the manner prescnbed in lhc Insurance Regulatory :1nd l)cvclopmcm A111hority (Assets, Liabilitfes ::i.nd Solvency Margm of Insurers) Regulations. 2000 and 1be amounts of such la:.ib1li11cs arc fau• !lnd rc~1sonablc. I ~dso further certify 1hat the obove st3Ierncnt includes rht IBNR reserves which have been de,ermincd by 1he appo1(1t1.-d actuary and his cc:rtif1ca1e :s fum1 shed herein below. Qualifications. of any { in regard 10 the deiem1inauon of liabilmes): Place: Date. Name and Sognarwc of the A11dJ1or. Certification from the Appointed Acruary I ccnify that the 113NR resco ves 111 the statement above repres,en~ on my opmion, blle and fatr amount. Qualificauons. 1f any (in regard 10 the de1crmma11on of IJ3NR re-serves): Place: Date: Name and Signature of the Appointed Actuary. ! I r ["ll'lill-~4) Schedule m-A (See Regulation 5) DETERMJNA TION OF SOLVENCY MARGINS-LIFE INSURERS 27 I. Interpretation.- In 1his Schedulc- (a) 'Available Solvency Margin' means lhe excess of value of assets (furnished in !RDA· forr11- AA) over the value of life insurance liabilities (furnished In Form ·H as speeified in Regula1ion 4 of Insurance Reb'lllatory and Development A1ithor11y (Acniarial Repon and Absu-act) Regulations, 2000) and olher liabilities of policyholders' fund and shareholders· funds; (b) "Solvency Rauo"' means the rauo of the ornounl of Available Solvency Marglll 10 the amount of Required Solvency Margin. 2. Determination of Solvency Margin.-Every insurer shall determine the required solvcricy margin , the available solvency margin. and the solvency rauo tn Form K as specified under Insurance Regulatory and Development Authority (Actuarial Repon and Abstract). Regulations. 2000. Schedule 111-B (Set· Section 5) DETERMINATION OF SOLVf:NCY MARGINS-CENERAI., INSURERS I. lnterpretalion.--ln this Schcdulc- (:t) .. Available Solvency Margm .. means the excess of value of assets (furnished m Forni IRDA-AssclS• AA) nver the value tof liao,lnie.s (tim,ishcd m Form HG). w1t.h further ad3ustrncms as shown 111 Table Ill of form Ku. th) '"Solvency R'1t10 .. mcaM 11tc ,·atlll of lhc amounl of Available Solvency Margin 10 the amount OI Required Sulvcnry Vbrg111 2. Uctcrminmion of Solvency M~1rgiu.-6v,iry msurcr shall detem1int th<:: reqmrcd solvency margin. the avniJablt sulv~ni.:y m:irgin. and the solvency raw, 111 Form KG. I 28 THE GAZETTE OF INDIA : EXTRAORDINARY Form KG (See Regulation 5) [PART' Ln-SEC. 4 J hJsurance Regulatory and Development Authority (Asseis, Liabilities and Solvency Margin) Regulation, 2000. TABLE [. STATEMENT OF SOL VEN CY MARGIN: (Gtneral Insurers) as at31" March, 20_. Form Code: [ ]( J[ )[ l{ I[ ][ ][ ][ l Name of Insurer: Registration Number: Daie of registration: _ ___ _ Classification: Business Within India/ To!al Business Classific.ation Code:[ ) TABLE l- REQUIRED SOLVENCY MARGIN BASED ON NET PREMIUM AND NET INCURRED CLAIMS {[N RS. LAXHS) lte Description (Class of Gross Net Gross Net RSM-I RSM-2 RSM m business) Premiums Premiums Incurred Incurred No claims Claims (l) (2) (3) (4) (6J (7) (8) (9) {10) 01 Fire Marine: 02 Marine Cargo 03 Marine Hull: Miscellaneous: 04 Motor 0.5 Engineering 06 Avjation 07 Liability 08 Rural lnsurance 09 Others 10 Health Insurance: 12 TOTAL I 29 Notes: ( I) RSM- I in the above 1able means Reqmred Solvency Marglll based on net premiums. and shall be determined as rwenry pc!' cen1. of the amouu1 wluch 1s the higher of the Gross l'rem,ums multiplied by a Fac1or A as specified b!!low and the Nee Premiums. (2) RSM-2 in 1hc abovc·table means Reqmred Solvency Margm based on net incurred cla,ms, and shall be detenui.oed as thirty per ~em. of the amount wh,ch is the higher of the Gross Net Incurred Claims multipued by a Factor fl as specified below and the Net Incurred Claims.: Item No Description (Class of A 8 business) (I) (2) (3) /4) 01 Fire 0.5 0.5 Marine: 02 Marine Cargo 0.7 0.7 03 Marine tlull: 0.5 0~'i Miscellaneous: 04 Mo1or 0.85 0.85 05 Engineering o.s 0.5 06 Aviauon 0.9 0.9 07 Liability 0.85 0.85 08 Rural Insurance 0.5 0,5 09 Others 0. 7 0.7 10 Healll1 0.85 0.85 (3) RSM means Required Solvency Margin and shall be the higher oftbe amounts of RSM-I and RSM-2. I 30 THE GAZETTE OF lNDIA : EXTRAORDINARY [PART Ill-SEC. 4] TABLE II-AVAILABLE SOLVENCY 11-WlGIN AND SOLVENCY RATIO Item Description Notes No .. Amoum (I) (2) (3) (4) 01 Availuole Assc,s in l'oltcyholdcrs' Funds: Deduct: 02 Liabiliues 03 Other Liabtlitie, 04 Excess in Policyholders' funds (01 - 02 - 03) 05 Avail~ble Assets 111 Shareholders funds: Deduct: 06 Other Liabilities 07 Excess in Shareholders' funds: (05 -06) 08 Total ASM (04)+(()7) 09 Total RSM JO Solvency Ratio (Total ASJ\,l/ Total RSM) Certification: I, . • 1he Auditor, cerufy that the above statements have been prepared m accordance with the Section 64V A'of the Insurance AcL 1938. aad the amounts mentioned thereui are true LO the best of my knowledge. Place Date: Countersignature: Notes Name and Signarure of the Auditor Principal Officer: I. Item No. OJ shall be the amount of the AdJUStcd Value of Assets in respect of policyholders' funds as mentioned in Fonn !RDA-Assets-AA. 2. Item No. 02 shall he the amounr ofT01aJ L1ab11ities as mentioned in Form HG. 3. Item No. Ol shall be the :,mount of other habiliues arising in respect oi policyltplders' funds and as memion~d in the Balance Sheet 4 1tcrP.s No. OS shall be the amount of the Total Assets in respect of shareholders' funds as mentioned in Form lRDA-Assets-J\A. 5. Item Nos. 06 shall be the amount of other habilities arismg in respect of shareholders' funds and as mcnlloncd m the Balance Sheet: N. RANGACHARY, Chairperson [No. ADVT_-J/4/Exty/161/2000] Prioi.d by tho MAMgcr, Go>1- of todla Press. Ring !\,,ad, ~fayapuri, New 0<1hi-l l()OQ4 and PubUshcd by !he Coauollcr of Publicatiom, Delhi• I t 0054 - 2000 I