Page 205 - IC46 addendum

Indian Accounting Standards

Insurance risk

IG51 Paragraph 39(c) of this Standard requires disclosures about insurance
risk. Disclosures to satisfy this requirement might build on the following
foundations:

(a) Information about insurance risk might be consistent with (though
less detailed than) the information provided internally to the
entity’s key management personnel (as defined in Ind AS 24
Related Party Disclosures), so that users can assess the
insurer’s financial position, performance and cash flows ‘through
the eyes of management’.

(b) Information about risk exposures might report exposures both
gross and net of reinsurance (or other risk mitigating elements,
such as catastrophe bonds issued or policyholder participation
features), especially if the insurer expects a significant change
in the nature or extent of its reinsurance programme or if an
analysis before reinsurance is relevant for an analysis of the
credit risk arising from reinsurance held.

(c) In reporting quantitative information about insurance risk, an
insurer might disclose the methods used, the strengths and
limitations of those methods, the assumptions made, and the
effect of reinsurance, policyholder participation and other
mitigating elements.

(d) Insurers might classify risk along more than one dimension.
For example, life insurers might classify contracts by both the
level of mortality risk and the level of investment risk. It may
sometimes be convenient to display this information in a matrix
format.

(e) If an insurer’s risk exposures at the end of the reporting period
are unrepresentative of its exposures during the period, it might
be useful to disclose that fact.

(f) The following disclosures required by paragraph 39 of this
Standard might also be relevant:
(i) the sensitivity of profit or loss and equity to changes in
variables that have a material effect on them.
(ii) concentrations of insurance risk.

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