Important Points for IC 99 - Asset Management Exam
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Solvency Margin of an insurance shows how solvent the company is, or how prepared it is to meet unforeseen exigencies basically cat claims. It is the extra capital that an insurance company is required to hold. The Irda (Assets, Liabilities, and Solvency Margin of Insurers) regulations 2000 -two separate regulations for life insurance companies and general insurance companies require all insurers to maintain solvency margins as stipulated in the regulations.
The above two solvency regulations 2000 have been amended with new regulations called IRDAI (Assets, Liabilities, and Solvency Margin of Life Insurance Business) Regulations, 2016 and IRDAI (Assets, Liabilities, and Solvency Margin of General Insurance Business) Regulations, 2016.
The IRDAI Solvency Margin Regulations 2016 for non-life insurers provide detail guidelines in respect of i) Valuation of Assets, ii) Statement of Admissible Assets iii) Determination of amount of liabilities, Unearned Premium Reserve, Premium Deficiency Reserve, & Unexpired Risk Reserve, iv) Determination of Outstanding Claims Reserve, IBNR Claims Reserve etc, v) Determination of other liabilities,
vi) preparation of statement of liabilities, g) Certification from Statutory Auditor in respect in respect of determination of liabilities in the manner prescribed in IRDA Solvency Regulations, 2016, vii) Certification from the Appointed Actuary in respect in respect of determination of liabilities in the manner prescribed in IRDA Solvency Regulations, 2016 and using actuarial priciples, viii) Certification by Principal officer in this respect, ix) Determination of solvency margin as per schedule III providing ASM, RSM & Solvency Margin.
The IRDAI Solvency Margin Regulations 2016 for life insurers provide detail guidelines in respect of i) Valuation of Assets, ii) Preparation of Statement of Assets, iii) valuation of liabilities, iv) Method of Determination of Mathematical Reserves, v) Discounting future policy cash flows at an appropriate rate of interest and with proper parameters, vi) Considerations of policy options and guarantees,
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