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shortcomings observed, the Authority decided to reiterate clarifications issued on earlier occasions through a comprehensive Circular for the guidance of the insurers.


Effective December, 2007, all insurers have been advised to file the quarterly financial statements with the IRDA. These statements include the Balance Sheet, Revenue A/c (Policyholders’ A/c) and the Profit & Loss A/c (Shareholders’ A/c).

II (a) Appointed Actuary System

One of the main areas which engage the attention of actuaries is the assessment of financial risks in the operation of the insurance companies so that the products sold by them do not contribute to financial risks. In this context they ensure that the solvency of the company is maintained at all points of time.

The Authority introduced the system of Appointed Actuary (AA) in the year 2000. During 2003-04, the Authority notified the “Qualification of Actuary” Regulations, defining an Actuary for the purpose of the Insurance act, 1938. The powers and duties of an Appointed Actuary are laid down by the Authority in the Regulations.

In the case of a non-life insurer, the AA is required to certify the rates for in-house non-tariff products and Incurred But Not Reported (IBNR) Reserves which are indicated under “Outstanding Claims” in the financial statement. While analyzing the availability of solvency in the insurance companies, one of the methods followed to ensure consistency and acceptability to the liability estimates prepared by actuaries is peer review system.

Review Committee

The Authority decided to have a Review Committee to review the Statutory Report furnished to the Authority in respect of Actuarial Report and Abstract required under Section 13 of the Insurance Act, 1938. The Authority constituted a new Actuarial Review Committee for the year 2008.

II (b) Actuarial Standards

The Actuarial Society of India (ASI) issued the first Guidance Note (GN-I) on “Appointed Actuaries and Life Insurance”. ASI issued the GN-21 for the appointed actuaries of general insurers.

viii) Crop Insurance

At present, the NationalAgricultural Insurance Scheme (NAIS) covers about 17 per cent of all farmers and 20 per cent of the cropped area. The Government has been striving to increase the penetration by encouraging the States to bring more and more crops under crop insurance. The Government also directed the Banks to insure all eligible crop loans under NAIS. The Working Group set up in Planning Commission at the beginning of XI Plan period, proposed a target of 40 per cent of cropped area to be brought under crop insurance by 2011- 12. A few proposals for bringing in improvements in NAIS are with the Government, which if accepted by the Government are expected to increase crop insurance penetration. Some proposals are:

  • 1.

    Reduction of Insurance Unit to Gram Panchayat for major crops

  • 2.

    Guaranteed Yield to be based on long period average

  • 3.

    Coverage of pre-sowing and post-harvest risks

  • 4.

    On-account payment of compensation during the season, using weather index, crop health index, etc.

  • 5.

    Individual farm assessment of claims in case of localized risks like hailstorm, landslide etc.

  • 6.

    Placing NAIS on ‘actuarial regime’, with up-front subsidy in premium by the Government

  • 7.

    Increased and focused effort towards creating crop insurance education & awareness

Use of Satellite Imagery in Crop Insurance:

Realizing the potential of Remote Sensing Technology, Agriculture Insurance Company of India Limited (AIC),



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