Will IFRS 17 and RBC Enhance Transparency and Capital Adequacy in India's Insurance Sector?
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Synopsis
India's transition to IFRS 17 and RBC is set to revolutionize the insurance sector, enhancing transparency and capital adequacy as the nation aims for comprehensive insurance coverage by 2047. Discover how these reforms will reshape the industry landscape.
Key Takeaways
- IFRS 17 will enhance accounting practices in the insurance sector.
- The RBC framework provides a comprehensive risk assessment.
- India aims for Insurance for All by 2047.
- Digital innovation will play a crucial role in this transition.
- Timely financial decision-making will be enabled through modernized data platforms.
New Delhi, Nov 21 (NationPress) The shift to Ind AS/IFRS 17, a revolutionary approach to insurance contract accounting, alongside a risk-based capital (RBC) framework, is set to enhance transparency, comparability, and capital adequacy within India's insurance industry, according to a report released on Friday.
A collaborative study by ASSOCHAM and PwC India outlined that these combined reforms will lay the groundwork for the government’s ambition of Insurance for All by 2047 and the vision of Viksit Bharat@2047.
Significantly, IFRS 17 will transform insurance accounting, providing more detailed disclosures and a clearer separation between insurance and investment results. It will also facilitate profit recognition linked to the delivery of insurance services, the report noted.
The risk-based capital framework will assess various risks, including market, life, non-life, counterparty default, and operational risks, based on an economic balance sheet approach, the report elaborated.
“The insurance sector in India stands at a pivotal point, propelled by digital innovation, robust regulation, and a renewed national focus on sustainability,” stated Manish Singhal, Secretary General of ASSOCHAM.
“This transition presents a strategic chance for insurance companies to bolster trust, enhance risk resilience, and innovate financial management. Organizations that modernize their data, actuarial, and finance functions will be better positioned to pursue sustainable growth in a fast-evolving market,” remarked Amit Roy, Partner and Leader – Insurance and Allied Businesses at PwC India.
The report emphasized the necessity for centralized data platforms, actuarial advancement, automation, and sophisticated analytics to support timely, precise, and strategic financial decision-making.
The IRDAI has conducted gap assessments and established timelines for the initial submissions of proforma Ind AS 117, with the first cycle expected in December 2025 and the subsequent one in June 2026.
The RBC QIS2 exercise wrapped up on October 15, 2025, with further guidance and milestones anticipated soon, the report noted.
Point of View
It is crucial to recognize the implications of IFRS 17 and RBC. This reform is more than a regulatory change; it's a commitment to enhancing trust, resilience, and accountability within the industry. Such measures align seamlessly with India's broader vision for a sustainable and inclusive future in financial services.
NationPress
21/11/2025
Frequently Asked Questions
What is IFRS 17?
IFRS 17 is a new international standard for accounting for insurance contracts, aimed at improving transparency and comparability in financial statements.
What does the risk-based capital framework entail?
The risk-based capital framework quantifies various risks that insurance companies face, such as market and operational risks, providing a more accurate assessment of capital needs.
How will these reforms affect consumers?
These reforms aim to provide consumers with clearer information regarding insurance products, enhancing trust and enabling informed decision-making.
What is the timeline for implementing these changes?
The first cycle of submissions for proforma Ind AS 117 is due in December 2025, with the second cycle following in June 2026.
Who are the key stakeholders involved in this transition?
Key stakeholders include the Insurance Regulatory and Development Authority of India (IRDAI), ASSOCHAM, and PwC India, among others.
