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ANNUAL REPORT 2011-12
I.4.8.7 In case of a life insurer, the Appointed Actuary
certifi es the company’s technical reserves, solvency
and fairness of premium rates. In addition to this, the
Appointed Actuary must carry out the Economic Capital
calculations in order to ensure proper balance between
capital adequacy and capital efficiency. The Appointed
Actuary has the responsibility to ensure the asset
liability management, so as to enable the insurer to
meet the obligations as and when due, without any
liquidity issues and any sudden shocks with stress
testing.
I.4.8.8 In case of a non-life Insurer, while ensuring the
solvency, the Appointed Actuary is required to certify
the claim provisions relating to IBNR (Incurred But Not
Reported) and IBNER (Incurred But Not Enough
Reported) claims. The Appointed Actuary is also
required to prepare the Financial Condition Report in
order to bring out the challenges which the insurer
carries in terms of meeting solvency requirements,
other parameters which affects the fi nancial condition
of the company, stress testing and asset liability
management. Further, the Appointed Actuary must
carry out the Economic Capital calculations in order to
improve the capital effi ciency.
I.4.8.9 The Appointed Actuary remains responsible to
the Regulatory Authority for providing various
information and certification and he/she is also
empowered to ‘blow the whistle’ when needed. He/she
is also required to conform to the Actuarial Practice
Standards (APS) issued by the Profession from time
to time. In the present scenario, which is driven by
various uncertainties, the Appointed Actuary has a
major role to play to ensure that the interests of various
stakeholders are protected. The procedure for
appointment of an ‘Appointed Actuary’ is stipulated in
IRDA (Appointed Actuary) Regulations, 2000. The
Authority is the process of amending these Regulations
by stipulating additional provisions / amending existing
provisions relating to the eligibility criteria.
Actuarial Valuation – Life
I.4.8.10 The analysis of the Actuarial valuation and
related reports was done by the Actuarial Review
Committee (ARC) constituted for the purpose till the
financial year 2009-10. Since the financial year
2010-11, the ARC was dispensed with and the task of
analysis of Actuarial valuation and related reports are
now being carried out internally by the Actuarial
department of the Authority.
Product Approval Committees
I.4.8.11 In order to ensure that the process of insurance
product approval is endowed with necessary expertise
from all the functional areas related to ‘File and Use
procedure’, the Authority has constituted the Product
Approval Committees for approval of products in life
and non-life insurance segments. These Committees
examine the desirability and viability of the products
submitted by the insurers on the bases of actuarial
calculations and actual experience before giving their
approval.
I.4.9 ANTI-MONEY LAUNDERING/COUNTER-
FINANCE OF TERRORISM (AML/CFT) PROGRAMME
FATF Membership - Action Plan
I.4.9.1 The IRDA issued the AML/CFT guidelines to the
insurance sector in March 2006 drawing powers from
the Prevention of Money Laundering Act, 2002 and the
Rules framed there under. Since then, the insurance
sector has moved into seventh year of effective AML/
CFT regime in India. Compliance with the requirements
under the guidelines is monitored through off-site /
on-site inspections. The guidelines have been
subjected to thorough evaluation of compliance with
FATF Recommendations. IRDA was actively involved
in the assessment processes, which led to India’s
Membership into FATF in June 2010. In the course of
action, India committed to a time bound action plan to
FATF Secretariat comprising of amendments to certain
legislations required under the said Recommendations.
IRDA is actively working on action points relevant to
the insurance sector. All the action points have been
accomplished except the one requiring effective
mechanisms on Sharing of Information. IRDA’s policy
on sharing of information is already in place. In addition
to the same, being a signatory of Multilateral
Memorandum of Understanding (MMoU) of International
Association of Insurance Supervisors (IAIS), would
provide an international platform for sharing of
information. IRDA’s application into MMoU is under
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