Insurance Regulatory and Development Authority of India (Appointed Actuary) Regulations, 2022
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
OF INDIA
NOTIFICATION
Hyderabad,
the 5th December, 2022
Insurance Regulatory and Development Authority
of India (Appointed Actuary) Regulations, 2022
F. No. IRDAI/Reg/5/184/2022. —In exercise of the powers conferred
by clause (zd) of sub-section (2) of section 114A of
the Insurance Act, 1938 (4 of 1938), sections 14 and 26 of the Insurance
Regulatory and Development Authority Act,1999 (41 of 1999), the Authority in
consultation with the Insurance Advisory Committee, hereby makes the following
Regulations, namely: –
1. Short title and commencement. —-
A. These Regulations may be called Insurance
Regulatory and Development Authority of India (Appointed Actuary) Regulations,
2022.
B. The Insurance Regulatory and
Development Authority of India (Appointed Actuary) Regulations, 2017 and any
amendments made thereafter shall be repealed from the date these Regulations
come into force.
C. These Regulations shall come into force
from the date of their publication in the Official Gazette.
D. These Regulations shall be reviewed once
in every three years from date of notification, unless the review or repeal or
amendment is warranted earlier.
2. Definitions. –
A. In these Regulations, unless the context
otherwise requires —-
i. “Act” means the Insurance Act, 1938 (4
of 1938);
ii. ”Actuary” means an actuary as defined in
clause (a) of sub-section (1) of section 2 of the Actuaries Act 2006;
iii. “Appointed Actuary” means an actuary
mentioned in Regulation 3(A) of these Regulations;
iv. “Authority” means the Insurance
Regulatory and Development Authority of India established under sub-section (1)
of section 3 of the Insurance Regulatory and Development Authority Act, 1999
(41 of 1999);
v. “Institute of Actuaries of India” means
a statutory body established under section 3 of The Actuaries Act 2006 (35 of
2006);
vi. “Professional Standard” means the standard
of practice specified by the Institute of Actuaries of India by issue of
Guidance Notes/Actuarial Practice Standard to its members.
B. All words and expressions used herein
and not defined herein but defined in the Insurance Act, 1938 (4 of 1938), or
in the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999),
shall have the meanings respectively assigned to them in those Acts.
3. Procedure for Appointment of an Appointed
Actuary. —
A. An insurer registered to carry on
insurance business in India shall, subject to Regulation 3(B) and Regulation
3(F) of these Regulations, appoint an actuary, who shall be known as the
‘Appointed Actuary’ for the purposes of the Act.
B. A person shall be eligible to be
appointed as an Appointed Actuary for an insurer, if he or she is:
i. Ordinarily resident in India;
ii. A Fellow member in accordance with the
Actuaries Act, 2006;
iii. A Fellow Member of the Institute of
Actuaries of India(IAI), satisfying the following requirements in case of a
Life Insurer:
a. At least 12 years of experience in the
area of Life Insurance and out of which at least 7 years shall be post
fellowship experience. Provided, if the applicant has passed the Specialist
Application or Specialist Advanced level subject in Life Insurance from
Institute of Actuaries of India or from any other institute or body with which
IAI has Mutual Recognition Agreement, the experience criteria including post
fellowship experience criterion as mentioned in Regulation 3(B)(iii)(a) above
shall be reduced by 2 years.
b. At least 3 years post fellowship
experience out of 7 years or 5 years as applicable, as specified under
Regulation 3B(iii)(a) shall be in the preparation or review of annual statutory
valuation or product pricing of an Indian Life Insurer. Notwithstanding above,
experience in the area of Life Insurance as a Peer Reviewer or Independent
Actuary or Panel Actuary or Actuary certifying the reinsurance returns for Life
reinsurance business or experience in actuarial consultancy in Life Insurance
business or relevant experience with the Authority shall also be considered.
c. At
least 3 years of experience shall be in the role of middle or senior level
management.
iv. A Fellow Member of the Institute of
Actuaries of India(IAI), satisfying the following requirements in case of a
General Insurer:
a. At least 9 years of experience in the
area of General Insurance and out of which at least 4 years shall be post
fellowship experience. Provided, if the applicant has passed the Specialist
Application or Specialist Advanced level subject in General Insurance from
Institute of Actuaries of India or from any other institute or body with which
IAI has Mutual Recognition Agreement, the experience criteria including post
fellowship experience criterion as mentioned in Regulation 3(B) (iv)(a) above
shall be reduced by 2 years.
b. At least 2 years post fellowship
experience out of 4 years or 2 years as applicable, as specified under
Regulation 3B(iv)(a) shall be in the preparation or review of annual statutory
valuation or product pricing of an Indian General Insurer. Notwithstanding
above, experience in the area of General Insurance as a Peer Reviewer or Panel
Actuary or Actuary certifying reinsurance returns for General reinsurance
business or experience in actuarial consultancy in General Insurance business
or relevant experience with the Authority shall also be considered.
c. At least 3 years of experience shall be
in the role of middle or senior level management.
v. A
Fellow Member of the Institute of Actuaries of India(IAI), satisfying the
following requirements in case of a Health Insurer:
a. At least 9 years of experience in the
area of General or Health Insurance and out of which at least 4 years shall be
post fellowship experience. Provided, if the applicant has passed the
Specialist Application or Specialist Advanced level subject in General or
Health Insurance from Institute of Actuaries of India or from any other
institute or body with which IAI has Mutual Recognition Agreement, the
experience criteria including post fellowship experience criterion as mentioned
in Regulation 3(B)(v)(a) above shall be reduced by 2 years.
b. At least 2 years post fellowship
experience out of 4 years or 2 years as applicable, as specified under
Regulation 3B(v)(a) shall be in the preparation or review of annual statutory
valuation or product pricing of an Indian General or Health Insurer. Notwithstanding
above, experience in the area of General or Health Insurance as a Peer Reviewer
or Panel Actuary or Actuary certifying reinsurance returns for General or
Health reinsurance business or experience in actuarial consultancy in General
or Health insurance business or relevant experience with the Authority shall
also be considered.
c. At least 3 years of experience shall be
in the role of middle or senior level management.
vi. An employee of the insurer on full time
basis;
vii. A person who has not committed any
professional or other misconduct;
viii. Not an Appointed Actuary of any other
insurer in India;
ix. A person who possesses a Certificate of
Practice issued by the Institute of Actuaries of India;
x. Not over the age of 70 years.
C. Provision for existing Appointed
Actuaries as on date of notification of these Regulations: The existing
Appointed Actuaries as on the date of notification of these Regulations are
eligible to continue as Appointed Actuary of the respective insurer.
D. An insurer shall seek the approval of
the Authority for the appointment of Appointed Actuary, submitting the
application in the format as may be specified from time to time.
E. The Authority shall, within thirty days
from the date of receipt of application, either accept or reject the same.
Provided that before rejecting the application, the Authority shall give an
opportunity of being heard to the insurer.
F. An insurer, who is unable to appoint an
Appointed Actuary in accordance with Regulation 3(B) shall make an application
to the Authority in writing for relaxation of any of the eligibility
conditions. The Authority may grant relaxation of one or more conditions.
However, there shall be no relaxation in respect of conditions under
Regulations 3(B)(ii), 3(B)(vii) & 3(B)(ix).
G. The appointment of an Appointed Actuary
shall take effect on or after the date of approval by the Authority.
4. Effect of rejection of the application. —
The insurer shall, within four weeks
of rejection of the application referred to under Regulation 3(E), apply to the
Authority under Regulation 3(D) for the appointment of a person as an Appointed
Actuary other than the one rejected by it under Regulation 3 (E).
5. Carrying on business without Appointed
Actuary. —
a) No
insurer shall carry on the business of insurance/reinsurance without an
Appointed Actuary. Any noncompliance in this regard shall attract appropriate
actions under the relevant provisions of the Insurance Act, 1938.
b) The Authority, on request of the insurer
for relaxation of the provisions under Regulation 5(a), may grant relaxation
for such period as may deem appropriate but not exceeding one year.
c) The Chairperson of the Authority may
issue circular(s) from time to time regarding the transitory provisions for
consideration of relaxation referred under Regulation 5(b) above
6. Cessation of Appointment of Appointed
Actuary. –
A. An Appointed Actuary shall be given a
notice of withdrawal of approval by the Authority on the following grounds:
i. that he or she ceases to be eligible in
accordance with sub-regulation (B) of Regulation (3), or;
ii. that he or she has, in the opinion of the
Authority, failed to perform adequately and properly the duties and obligations
of an Appointed Actuary under these Regulations.
B. The Authority after serving a notice to
such Appointed Actuary shall grant an opportunity of being heard and thereafter
issue appropriate order either withdrawing approval or revocation of the notice
issued.
C. If a person ceases to be an Appointed
Actuary of an insurer otherwise than on the grounds mentioned in Regulation
6(A), the insurer and the Appointed Actuary shall intimate the Authority the
reasons there for within one week of such cessation.
D. The insurer in consultation with Appointed
Actuary shall endeavour to avoid delay in submission of annual statutory
returns arising from cessation of services of Appointed Actuary.
7. Powers of Appointed Actuary: —
A. An Appointed Actuary shall have access to
all such information and documents in possession or under control, of the
insurer if the same access is necessary for the proper and effective
performance of the functions and duties of the Appointed Actuary.
B. The Appointed Actuary may seek any
information for the purpose of Regulation 7(A) of these Regulations from any
officer or employee of the insurer.
C. The Appointed Actuary shall be entitled:
i. to attend, speak and discuss on any
matter in meetings of the management including directors meeting of the insurer
and in meetings of the shareholders or the policyholders of the insurer:
a. that relates to the actuarial advice
given to the directors;
b. that may affect the solvency of the
insurer;
c. that may affect the ability of the
insurer to meet the reasonable expectations of policyholders; or
d. on which actuarial advice is necessary.
D. An Appointed Actuary shall be entitled to
make any statement to insurer, for the purpose of the performance of his or her
functions as Appointed Actuary. This is in addition to any other privilege
conferred upon an Appointed Actuary under any other Regulations.
E. No provision of the letter of appointment
of the Appointed Actuary, shall restrict or prevent his or her duties,
obligations and privileges under these Regulations.
8. Duties and obligations. —
In
particular and without prejudice to the generality of the foregoing matters,
and in the interests of the insurance industry and the policyholders, the
duties and obligations of an Appointed Actuary of an insurer shall include: —
i. Ensuring that all the requisite records
have been made available to him or her for the purpose of conducting actuarial
valuation of liabilities and assets of the insurer;
ii. Rendering actuarial advice to the
management of the insurer, in particular in the areas of product design and
pricing, insurance contract wording, investments and reinsurance;
iii.
a. Identifying
and monitoring the risks associated with the insurer’s ability to maintain the
solvency at all times;
b. Reporting those risks to the Board of the
insurer where the Appointed Actuary believes that there are material concerns
which may adversely affect the solvency of the insurer with recommendations on
actions to be taken for rectification of solvency position and informing the
Authority, if the insurer fails to take necessary steps to rectify the
situation;
iv. Complying with the provisions of the
section 64V of the Act in regard to certification of the assets and liabilities
that have been valued in the manner required under the said section;
v. Complying with the provisions of the
section 64 VA of the Act in regard to maintenance of required control level of
solvency margin in the manner required under the said section;
vi. Drawing the attention of management of the
insurer, to any matter on which he or she thinks that action is required to be
taken by the insurer to avoid any contravention of the Act of such a nature
that it may affect the interests of the policyholders;
vii. Complying with the Authority’s directions
from time to time;
viii. Ensuring that overall pricing policy of the
insurer is in line with the overall underwriting and claims management policy
of the insurer;
ix.
Ensuring adequacy of reinsurance arrangements;
x. Contributing to the effective
implementation of the risk management system;
xi. Complying with the provisions of section
21 of the Act in regard to further information required by the Authority;
xii. In addition to the above, the duties of
an Appointed Actuary of an insurer carrying on life insurance business shall
include:
a. Certifying the actuarial report and
abstract and other returns as required under section 13 of the Act;
b. Complying with the provisions of the
section 112 of the Act in regard to recommendation of interim bonus or bonuses
payable by life insurer to policyholders whose policies mature for payment by
reason of death or otherwise during the inter-valuation period;
c. Rendering actuarial advice in respect of
expenses of management of the insurer;
d. Ensuring that the premium rates of the
insurance products are fair;
e. Certifying that the mathematical reserves
have been determined in the manner prescribed in the extant provisions of
Insurance Regulatory and Development Authority of India (Assets, Liabilities
and Solvency Margin of Life Insurance Business) Regulations, 2016 and taking
into account the Guidance Notes /Actuarial Practice Standard issued by the
Institute of Actuaries of India and any directions given by the Authority;
f. Ensuring that the policyholders’
reasonable expectations have been considered in the matter of valuation of
liabilities and distribution of surplus to the participating policyholders who
are entitled for a share of surplus;
g. Submitting the actuarial advice in the
interests of the insurance industry and the policyholders;
h. Coordinating the calculation of
mathematical reserves;
i. Ensuring
the appropriateness of the methodologies and underlying models used, as well as
the assumptions made in the calculation of mathematical reserves;
j. Assessing
the sufficiency and quality of the data used in the calculation of mathematical
reserves;
k. Informing the Board of insurer about
the reliability and adequacy of mathematical reserves;
xiii. In addition to (i) to (xi) above, the duties
of the Appointed Actuary of the insurer carrying on general insurance business
or health insurance business include:
a. Ensuring that the premium rates of the
insurance products are fair;
b. Certifying that claims reserves including
reserves for incurred but not reported claims (IBNR) and other reserves
(including reserves for incurred but not enough reported claims (IBNER) and
premium deficiency reserve (PDR)) have been determined using actuarial
principles and in the manner prescribed in the extant provisions of Insurance
Regulatory and Development Authority of India (Assets, Liabilities and Solvency
Margin of General Insurance Business) Regulations, 2016;
c. Rendering actuarial advice in respect of
expenses of management of the insurer;
d. Coordinating the calculation of reserves
for IBNR and other reserves (including reserves for IBNER and PDR);
e. Assessing the sufficiency and quality of
the data used in the calculation of reserves for IBNR and other reserves
including reserves for IBNER and PDR;
f. Informing the Board of insurer about the
reliability and adequacy of reserves for IBNR and other reserves including
reserves for IBNER and PDR;
xiv. informing the Authority in writing of his
or her opinion, within a reasonable time,
a. any contravention of the Act or any other
acts by the insurer is of such a nature that it may affect significantly the
interests of the Policyholders or beneficiaries of policies issued by the
insurer;
b. whether the directors of the insurer have
failed to take such action as is reasonably necessary to enable him or her to
exercise his or her duties and obligations under these Regulations; or
c. whether an officer or employee of the
insurer has engaged in conduct in order to prevent him or her exercising his or
her duties and obligations under these Regulations.
xv. If an Appointed Actuary is disqualified to
act as an Actuary, he or she ceases to exist as Appointed Actuary forthwith;
xvi. while carrying out his or her duties and
obligations, the Appointed Actuary shall pay due regard to generally accepted
actuarial principles and practices;
xvii. the Appointed Actuary shall inform the
Authority of any disciplinary proceedings initiated against him or her by any
entity within seven days from the date of such initiation.
9. Conflict of interest —
a. The Appointed Actuary shall function in
accordance with these Regulations, and he or she shall not function in any
other capacity which could result in conflict of interest in performing his or
her role as Appointed Actuary in accordance with these Regulations;
b. The insurer and the Appointed Actuary
shall comply with the provisions of Regulation 9(a) above at all times during
his or her tenure as Appointed Actuary
10. Obligations of the insurer —
a. The insurer shall provide adequate
resources to the Appointed Actuary;
b. In order to build up or develop
sufficient actuarial expertise, life insurers shall have at least two actuaries
and General/Standalone Health insurers shall have at least one actuary in
addition to Appointed Actuary for pricing and valuation purposes within such
period as notified by the Authority from time to time;
c. The insurer shall ensure that different
functions of the insurer provide adequate support to the Appointed Actuary in
discharging his or her duties and obligations;
d. The insurer shall ensure that the
Appointed Actuary does not simultaneously perform the role of Chief Risk
Officer of the insurer defined as per the extant provisions of Corporate
Governance Guidelines issued by the Authority. The Chief Risk Officer however
may preferably be an Actuary independent of the Appointed Actuary.
e. The insurer shall ensure that the
Appointed Actuary reports directly to Chief Executive Officer of the insurer.
11. Applicability to reinsurance business —
These Regulations shall apply to
reinsurers carrying on reinsurance business in India except in case of a
foreign insurer engaged in re-insurance business through a branch established
in India.
12. Power of the Authority to issue
clarifications etc.
In order to remove any doubts or
difficulties that may arise in the application or interpretation of any of the
provisions under these Regulations, the Chairperson may issue appropriate
clarifications or guidelines as deemed necessary.
DEBASISH
PANDA,
Chairperson
[ADVT.-III/4/Exty./446/2022-23]