Dear Esteemed Members,NEW DELHI: The accounting regulator the Institute of CharteredAccountants of India (ICAI) has constituted an expert group to suggestsector-specific accounting norms for insurance companies. The moveaims at ensuring that financial statements of insurance firms reflecttrue natures of financial arrangements. ICAI president Uttam PrakashAgarwal confirmed the development. “ICAI is planning to come up withspecific accounting standards for the insurance sector,” he told ET.New standards will help in making financial statements of insurancecompanies — public as well as private — easier for the investors tocomprehend, as it will require the companies to show their fields ofrevenue generation with clarity, he said. These independent accountingstandards for the country’s insurance sector will be in addition tothe already existing accounting norms which the insurance companiesfollows now.The insurance regulator, Insurance Regulatory Development Authority(Irda) has directed all domestic life insurance companies to tightentheir expenses in order to procure durable business. This move cameafter reports surfaced that insurers are making disproportionatelyhuge commission payments to their intermediaries, other thanindividual agents. This, in turn, affects the overall financialstrength of the companies.The definition of related parties to intermediaries should beconformity with the accounting standards of ICAI and Companies Act.The regulator has also stipulated that the information certificategiven by the company to the regulator should have signatures of theinsurer’s chief executive officer, the chief financial officer and thecompliance officer.
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