Ind AS 117, Insurance Contracts

“The financial reporting landscape in India has undergone significant transformation over the past decade. Whilst Corporates and NonBanking Finance Companies (NBFCs) have successfully transitioned to Indian Accounting Standards (Ind AS), Insurance entities continue to prepare their financial statements using the Generally Accepted Accounting Principles in India (I GAAP) and Insurance Regulatory and Development Authority of India (IRDAI) regulations. However, during the same period, the global financial reporting landscape for insurance contracts has seen significant advancements with the implementation of International Financial Reporting Standards (IFRS) 17. The new standard, IFRS 17, Insurance Contracts, became applicable on 1 January 2023, marking a pivotal shift in how insurance contracts get reported.
In India, Ind AS 117 in exposure draft stage was first issued by the ICAI in 2018. This was then sent to the National Financial Reporting Authority (NFRA) for feedback, whereby in July 2023, the NFRA shared its recommendations with the Ministry of Corporate Affairs (MCA). Following this, in August 2023, the IRDAI directed select insurance entities to adopt and prepare their financial statements under IFRS 17. Furthering this initiative, in February 2024, IRDAI announced the reconstitution of the Expert Committee on the implementation of Ind AS 117. This committee was tasked with developing steps for the effective implementation of Ind AS, providing phase-wise timelines, and offering recommendations on proforma financial statements and financial disclosures in compliance with Ind AS. Recently, the MCA, via notification no. G.S.R. 492(E) dated 12 August 2024 has amended the Companies (Indian Accounting Standard) Rules, 2015, and introduced the new Ind AS 117, Insurance Contracts. This standard is proposed to be effective from 1 April 2024, marking a crucial step towards aligning India’s accounting practices with global standards. “