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What happened
India's Insurance Regulatory and Development Authority (IRDAI) has approved risk-based capital (RBC) norms and a new accounting standard, Ind AS 117, effective April 2026. The RBC rules tie capital requirements to risks from underwriting, investments, credit, and operations, replacing a uniform solvency approach. Ind AS 117 will shift revenue recognition to spread income over the insurance coverage period and demand greater financial disclosure. These reforms align Indian insurance practices with global standards and are expected to impact product design, pricing, and risk management.
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Key insights
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Risk-Based Capital Requirements: Insurers must hold capital matching their risk exposures, including underwriting and operational risks.
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New Accounting Standard Ind AS 117: Insurers will recognize revenue over time and disclose claims, risk adjustments, and profit margins separately.
Takeaways
These regulatory changes aim to improve the financial stability and transparency of India's insurance sector by aligning it with international standards.
Topics
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