ANNUAL REPORT 2007-08
THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY NOTES TO THE ANNUAL STATEMENT OF ACCOUNT FOR THE YEAR 2007-08
[Unless otherwise specified, all amounts are in rupees]
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
(The Authority) was established by an Act of Parliament
Insurance Regulatory & Development Authority Act, 1999 [Act] - and was constituted on April 19, 2000 by a notification issued in the Gazette of India. The Authority was established with a view to protecting the interests of the holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto, issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel registration, and levy fees and other charges for carrying out the purposes of the Act. The Authority, in terms of section 13 of the Act has been vested with the assets and liabilities of the Interim Insurance Regulatory Authority as are available on the appointed day i.e. April 19, 2000. In terms of section 16 of the Act a fund shall be constituted namely ‘The Insurance Regulatory and Development Authority Fund” [Fund]. The Fund shall constitute of all Government grants, fees and charges received by the Authority, all sums received by the Authority from such other source as may be decided upon by the Central Government and the percentage of prescribed premium income received from the insurer. The Fund shall be applied for meeting the salaries, allowances and other remuneration of the members, officers and other employees of the Authority and the other expenses of the Authority in connection with discharge of its functions and for the purposes of the Act.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements are prepared under the historical cost convention, on the accrual basis of accounting save for revenue recognition on cash basis as explained
hereunder, and in accordance with the applicable standards on accounting issued by the Institute of CharteredAccountants of India. The significant accounting policies are as follows:
(a) Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation. Depreciation on fixed assets is provided pro- rata to the period of use on reducing balance method using rates determined based on the rates specified in Schedule XIV to the CompaniesAct, 1956. Assets costing less than 5,000 have been depreciated 100% in the year of purchase unless the assets constitutes more than 10% of the respective block, in which case the asset is depreciated at the rates specified in the said Schedule XIV.
InvestmentsInvestments in the nature of fixed deposits with banks are stated at cost.
Registration Fee(a) Received from insurer seeking for the first time, registration for carrying on any class of insurance business in India is treated as income of the year of receipt.
Received in advance from insurers for renewal of registration is treated as income of the year to which it relates.
Licence FeeLicence fee received from insurance agents, surveyors, brokers and other insurance intermediaries is treated as income of the year of receipt. Licences issued to insurance agents, surveyors, brokers and other insurance intermediaries are current for those years from date of issue and subject to renewal at the end of their currency. It is not practicable to distribute the Licence fee over the years to which they relate.