In the meeting held on 23rd February 2023, the executive body of National financial reporting authority (NFRA) held interactions with members of life insurance industry to discuss proposed to changes in Ind AS 117. The meeting was attended by representatives from IRDA as well.
The proposed revision in 117 is based on IFRS 17-corresponding International standards that govern insurance contracts.
IFRS 17 and timeline of changes:
prior to IFRS 17, Insurance contracts was governed by IFRS 4,which was initially issued in 2004 as interim standard, until IASB comes up with guidelines based on its second & more comprehensive phase of insurance accounting project.
Revision to the standards were made and IFRS 17 which was supposed to replace IFRS 4 was issued by the International accounting standard board in May 2017.
The original effective date of IFRS 17 was supposed be 1st January 2021, but IASB In Nov 2018, postponed the applicability to 1st jan 2022 and in March 2020, it further deferred the effective date to 2023.
Now, the standard has become globally effective wef 1st Jan 2023.
ICAI's exposure draft on Ind AS117:
ICAI had issued Exposure draft of Ind AS117 in March 2018 and subsequently in February 2022 , soliciting public comment on the proposed changes. Entities in life insurance business had offered their comments to the exposure draft since then. Subsequently, ICAI placed the IndAS 117 proposal along with the public consultations, before NFRA.
Proceedings of meeting on draft proposal :
Chairman of NFRA emphasising importance of role of insurance industry in the global economy, quoted data from an IASB study, that states the insurance sector holds assets of worth US$13 Trillion, accounting for about 12% of total Assets of listed companies in 2015. He said that, given the importance of this sector, it is important to appreciate the existing practices followed and also the expected benefits from convergence with IFRS.
Discussions were also held with representatives of IRDAI, where they provided Insights on:
-Intricacies of proposed Ind AS;
-Capacity building and
-knowledge sharing to equip companies and professionals to handle change.