IRDAI pushes for IFRS17, but actuaries want deferment

Mumbai: IRDAI chairman, Subhash Chandra Khuntia, has said the Regulator is working on implementing the International Financial Reporting Standard 17 (IFRS 17) and Risk Based Capital (RBC) regime in India in the near future and urged the actuaries to drive this. He lauded the role of the Actuaries in calculating the effects of uncertain events like climate change and Covid l9.

While addressing an event held by Institute of Actuaries of India (IAI) on Wednesday, Khuntia appreciated actuaries for designing appropriate products to balance the interests of policyholders and shareholders. He said that the Appointed Actuaries are the eyes and ears of the regulatory authority and they are essential to ensuring that the insurance companies remain solvent at all times.

However, the actuaries feel otherwise as they think that it may not be possible to implement the same within the deadline of April 2023. Subhendu Kumar Bal, IAI president and Chief Actuary & Chief Risk Officer, SBI Life Insurance told Bizz Buzz, "We have urged the regulator to get the deadline deferred by a minimum of one year. He said that the new norm has not been fully implemented in the other parts of the world. When it comes to our neighboring countries like China and Indonesia, it will take few more years for the full implementation of IFRS17, he added.

IFRS17 includes RBC too which, if implemented, will mean for having different solvency margin for various segments, depending upon the quantum of risk they carry. Aditya Jain who is AVP actuarial-IFRS 17 Tribe leader, Prudential Lie Assurance, Indonesia said that it will take 4-5 years for insurers in India to migrate to IFRS 17. As of now, an exposure draft has been shared by the regulator among the insurers and it was still in discussion stage only. Khuntia said the recent FDI relaxation in insurance is a long-awaited step and India provides a big market with huge resources and innovative ideas.

"Though the insurance penetration is low in India, we are recently seeing an increase in annuity products," Khuntia said. Khuntia asked the Institute of Actuaries of India to create awareness about the role's actuaries play in both traditional and non-traditional fields like Banking and other financial fields. He said that the actuaries are still a very small community in India and the Institute should take the necessary steps to increase the number of qualified actuaries especially in specialised fields like General Insurance to safeguard the public interest. He said that he could see actuaries leading insurance firms in the near future.

IRDAI chairman also asked the insurers to develop such products so as to provide cover in case of superannuation in annuity case and said that where we find that people live longer, and they need financial protection for their longer age. "How to develop some interesting products in this area should also be the focus of insurers. Some of you can develop such standard products," Khuntia said. Also, we have asked insurers to develop index-linked products. I had asked a committee of actuaries to do this and it has already submitted its report with my office, he added.