IFSCA has issued a Consultation paper on proposed Guidelines on IFSCA(Assets, Liabilities, and Solvency Margin of General, Health and Re-insurance business) Regulations, 2023. The paper invited suggestions on following regulations:
1. Quarterly Reporting Requirements
Under Regulation no.5(1) of the ALSM GI Regulations, all IIOs are mandated to submit three specific forms on a quarterly basis: ALSM-GI-A, ALSM-GI-L, and ALSM-GI-SM. This triad of forms is instrumental in ensuring that IIOs regularly disclose their financial and operational status. The ALSM-GI-A form likely pertains to administrative aspects, ALSM-GI-L to legal compliance, and ALSM-GI-SM to strategic management, although the specific content of these forms isn’t detailed in the excerpt provided.
2. Quarterly Certificate of Solvency and Capital Compliance
In addition to the forms, IIOs are required to submit a quarterly certificate demonstrating their solvency and compliance with capital requirements. For IIOs incorporated in an IFSC, this certificate must be signed by the appointed actuary and the principal officer. For unincorporated IIOs, the signing responsibility falls to the actuary or the principal officer of the parent entity. This certification process ensures that the IIOs maintain sufficient capital buffers and are solvent, which is crucial for policyholder protection.
3. Annual Actuarial Report for Incorporated IIOs
Another critical component of the regulations is the submission of an Annual Actuarial Report by IIOs set up in an incorporated form in IFSC. This comprehensive report includes a three-year business projection, an analysis of business growth, experience, premium adequacy, and several other crucial metrics. This requirement underscores the emphasis on long-term financial planning and the detailed evaluation of business performance.
4. Timeliness of Reporting
All the reports and certificates mentioned must be submitted within 45 days from the end of the reporting period. This stipulation ensures timely disclosure and enables prompt regulatory intervention if needed.
5. Submission of Returns to the Authority
The Principal Officer of all IIOs is also responsible for submitting a certified copy of any returns or submissions made to the home regulator related to the IIO to the Authority within 45 days of such submission. This requirement ensures that the regulatory authority in the IFSC has access to the same information as the home country regulator, facilitating better oversight.
6. Content and Guidelines for Annual Actuarial Report
The Annual Actuarial Report is a cornerstone document. It must cover various aspects, including business projections, risk management, capital adequacy, and complaints handling. The appointed actuary must follow specific guidelines while preparing this report, such as assessing materiality, quantifying uncertainty, and clearly stating assumptions. This report not only provides a snapshot of the current financial condition but also forecasts future scenarios, ensuring that IIOs are prepared for various contingencies.
7. Determination of Liabilities and Reserves
A significant portion of the regulations is devoted to the determination of liabilities and reserves, including Unearned Premium Reserve (UPR), Premium Deficiency Reserve (PDR), and Claim Reserves. The regulations specify the methods for calculating these reserves, emphasizing the use of sound actuarial principles and methods. This focus ensures that IIOs maintain adequate reserves to meet future claims and obligations.
