Regulator unveils disclosure norms for insurers going public

As insurance companies get closer to entering the capital market, the Insurance Regulatory and Development Authority (Irda) has come out with public disclosures guidelines, making it mandatory for these companies to provide data for a minimum four to five years.

The guidelines will come into force from November 1.

“It is essential that investors are fully aware of financial performance, company profile, financial position, risk exposure, corporate governance and the management well before the companies go for initial public offers,” said Irda.

The regulator said the disclosures on a quarterly and annual basis were in line with the guidelines of the International Association of Insurance Supervisors. Under the new regime, insurers will have to give information about the management and company philosophy as well as the investment profile throwing light on the balance sheet. In addition, the regulator wants insurers to provide information on risk concentration, solvency and business statistics, including claims ratio, persistence ratio, number of policies expiring and solvency ratio.

The regulator has proposed additional disclosures such as sensitivity analysis, related-party transaction, etc, in order to know the performance of the subsidiary companies and the concentration of reinsurance risk.

Several insurance companies will be completing the minimum 10 years of operations for going public within a few months. HDFC Standard Life, ICICI Prudential were among the first private sector companies to enter the market in 2000.

Under investment risk and performance parameters, the regulator wants insurers to disclose investment objectives, policies and management, asset class segregation, performance measurement and risk exposure.