MUMBAI, Jan 8: Even as the insurance industry is racing against time to comply with the Indian Accounting Standards (Ind-AS) from April, they point out some concern, particularly in regard to taxes that need to be addressed before the deadline by the insurance regulator Irda.
Various industry players and sectoral experts cite taxation issue as the most teething concern coupled with the impact on solvency, determining free reserves, measuring investment property as well as the fair value accounting which can create volatility.
Considering the short window, insurers have set up committees internally to ensure that the new accounting standard is implemented within the stipulated timeframe.
While the new reporting system becomes mandatory only from April 2018, the Irdai (Insurance Regulatory & Development Authority of India) has asked insurers to submit their accounts in the new format from the December quarter onwards.
It can be noted that in November, 2015, Irdai had asked the industry to converge their reporting with international financial reporting standard (IFRS). Following this, the Corporate Affairs Ministry asked Irdai to prepare a roadmap for Ind-AS adoption from April, 2018.
After this, to ensure smooth rollout, the Irdai set up an implementation group on the issue under the chairmanship of Irdai member V R Iyer.
Sai Venkateshwaran of KPMG India said before forcing the rollout, the ministry and regulator should to work together and take into account the recommendations of the implementation group and make suitable amendments to the regulations or even Ind-As standards.
The areas that need special attention are the impact on solvency, determination of free reserves, measurement of investment property, he said.
On the other hand, insurers claim they are fully prepared for the rollout of the new accounting standards despite these issues.
“We are fully prepared for implementation of new accounting standards, but still there are a few areas requiring clarification. Yet we are confident that Irdai would provide necessary support to ensure smooth implementation,” New India Assurance chairman G Srinivasan told PTI. (PTI)