IRDAI Mandates Ind AS for All Insurers — Here’s What the March 2026 Amendment Really Changes
In a move that redraws the accounting landscape for India’s insurance industry, IRDAI has published a sweeping amendment to its Actuarial, Finance and Investment Regulations — effective 1 April 2026. Every insurer in the country, from giant LIC to the newest health insurer, must now migrate to Indian Accounting Standards. Here is exactly what changed, who gets breathing room, and what you need to do next.
The Big Picture: What Was Amended by IRDAI?
On 30 March 2026, IRDAI issued F. No. IRDAI/Reg/2/216/2026 — the Insurance Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers) (Amendment) Regulations, 2026. It amends the base 2024 regulations by inserting a new Schedule — IIA, dedicated entirely to Ind AS finance functions.
In plain language: the era of IGAAP-based insurance financial statements in India is officially drawing to a close. All life insurers, general insurers, health insurers and re-insurers must now prepare financial statements under the Indian Accounting Standards framework, with Ind AS 117 (Insurance Contracts) sitting at the heart of it.
Ind AS brings Indian insurance accounting closer to IFRS 17 — the global standard adopted by most major economies. This improves comparability, transparency, and makes Indian insurers legible to international investors and reinsurers. For policyholders, it means more disclosure. For insurers, it means a significant systems and process overhaul.
Who Is Covered?
The amendment explicitly covers all categories of insurers registered with IRDAI:
The Forbearance Window: A One-Year Grace Period
Not every insurer will be ready to flip the switch on 1 April 2026. Recognising this, IRDAI has inserted Regulation 6A — Power to Exercise Forbearance. If your company cannot achieve full Ind AS compliance immediately, here is the structured relief pathway:
The forbearance application window closes 30 April 2026. If your board has not already approved an action plan and your finance team has not mapped out the transition roadmap, begin immediately. Missing this window forecloses the grace period option entirely.
The Parallel Submission Requirement
Even for fully compliant insurers, IRDAI has built in a transition cushion. During the first two years of implementation, every insurer must simultaneously furnish:
- Ind AS Financial Statements — prepared under Schedule IIA, filed with IRDAI
- Schedule II (IGAAP-based) Financial Information — to be disclosed on the insurer’s own website
This dual-track arrangement allows stakeholders — agents, policyholders, investors — to compare both frameworks during the adjustment period while the industry transitions.
📥Download the Official Text of Notification
What Financial Statements Must Now Be Prepared?
The minimum disclosure requirements under the new Schedule IIA are comprehensive. Every insurer must produce:
| Statement | Form Reference | Notes |
|---|---|---|
| Balance Sheet | Form Ind AS – BS | Statement of Financial Position; amounts in ₹ Lakhs |
| Statement of Changes in Equity | Form Ind AS – SOCE | Separately for current year and previous year |
| Statement of Profit and Loss | Form Ind AS – P&L | Includes Other Comprehensive Income (OCI) |
| Receipts and Payments Account | Ind AS Cash Flow | Direct Method only, per Ind AS 7 |
| Revenue Account (Policyholders) | Form Ind AS – RA | Mandatory to comply with Section 11, Insurance Act 1938 |
| Notes to Financial Statements | Schedules 1–23 | Material accounting policies + explanatory information |
Ind AS 117: The Engine of the Change
While the amendment touches all of Ind AS, the most transformative element is the mandatory adoption of Ind AS 117 — Insurance Contracts. This standard, India’s equivalent of IFRS 17, fundamentally changes how insurance contracts are recognised, measured, and reported.
Four Key Concepts Every CFO Must Understand
Annual Cohort Requirement: Insurers must group contracts issued in the same year together for measurement. This prevents profitable older blocks from subsidising newer loss-making cohorts — a practice that IGAAP allowed. For participating insurance contracts, this requirement applies in full.
Contractual Service Margin (CSM): Under Ind AS 117, unearned profit on insurance contracts is deferred as a CSM and released over the coverage period. The schedules require detailed reconciliation of CSM movements across 23 sub-line items, including changes relating to current, future, and past services.
Profit ≠ Distributable Surplus: This is perhaps the most important policy position in the entire regulation. The amendment states explicitly that “Profit recognised under Ind AS 117 is accounting profit for financial reporting purposes and shall not be treated as distributable surplus.” The actuarial surplus under Section 49 of the Insurance Act 1938 remains the basis for policyholder distribution. Both concepts must now be reported, with reconciliation disclosed.
Premium Allocation Approach (PAA): Short-duration contracts (most general insurance business) may use the simpler PAA rather than the full Building Block Approach, provided the coverage period is one year or less. Separate schedules (6a.1 vs 6a.2) are prescribed for each approach.
The regulation draws a hard line: Ind AS profit shown in the P&L cannot be paid out as dividends or policyholder bonuses unless the appointed actuary has recommended, and the Board has approved, the transfer of surplus from the policyholder fund. Finance teams need to document this reconciliation clearly in every set of accounts.
The New Oversight Structures
Joint Expert Group on Ind AS
IRDAI will constitute a Joint Expert Group to resolve implementation issues as they arise. Its composition is notable:
- Whole Time Member (Finance & Investment), IRDAI — as Chair
- Two representatives from the Institute of Chartered Accountants of India (ICAI)
- Two representatives from the Institute of Actuaries of India (IAI)
- One representative from SEBI
- One representative from the National Financial Reporting Authority (NFRA)
- Head of Department (Finance & Investment), IRDAI — as Member-Convener
This group will remain active for two years (extendable), providing a formal channel for the industry to raise and resolve accounting questions. Insurers who encounter ambiguity in implementing specific standards should document their queries and monitor guidance from this group.
Independent Validation Requirement
During the first year of Ind AS implementation, every insurer must obtain an independent validation of the processes used. The scope and manner of this validation will be specified by the Competent Authority. This is in addition to the statutory audit — insurers should engage their process validators early to avoid capacity crunches.
Life Insurer-Specific Requirements
Life insurers face additional segmentation obligations. Financial statements and schedules must be prepared separately for each of:
General & Health Insurer-Specific Requirements
For non-life insurers, segment-wise statements are required at minimum for fire, marine, and miscellaneous business. Within miscellaneous, sub-segments including Motor Own Damage, Motor TP, Health, Personal Accident, Travel, Workmen’s Compensation, Engineering, Aviation, and Crop must be reported separately. Any sub-segment contributing more than 10% of gross direct premium must be shown independently.
Auditor Responsibilities: What’s New?
Part II of Schedule IIA lays out auditor obligations that go beyond standard company audit requirements. Auditors must now specifically opine on:
- Whether the Balance Sheet gives a true and fair view under Ind AS
- Whether the Revenue Account fairly presents the policyholder fund P&L
- Whether investments have been valued per IRDAI regulations
- Whether accounting policies are appropriate and compliant with applicable Ind AS
- That no part of policyholders’ funds has been applied in contravention of the Insurance Act 1938
- That the management report contains no material inconsistencies with the Ind AS Financial Statements
Audit firms advising insurance clients should begin updating their audit programs now to reflect these specific sign-off requirements.
Action Checklist: What Should Insurers Do This Week?
These steps should be initiated before 30 April 2026 regardless of whether you plan to comply fully or seek forbearance.
- Board Resolution: Get a board resolution acknowledging the Ind AS transition requirement and mandating an action plan — this is required for both compliance and forbearance applications
- Gap Analysis: Compare your current chart of accounts, systems, and disclosures against the 23 schedules in the new regulation
- Actuarial Alignment: Bring the appointed actuary into the conversation early — the CSM calculation, annual cohort grouping, and policyholder surplus reconciliation all require actuarial input
- System Assessment: Check whether your policy administration, general ledger, and reporting systems can handle Ind AS 117 measurement requirements
- Forbearance Decision: Formally decide by late April whether to file for forbearance or proceed with full compliance — document the decision with board minutes
- Engagement Planning: If you need third-party validators, begin procurement now — demand will be high from all insurers simultaneously
- Parallel Run Setup: Plan for the two-year dual-reporting period — both Ind AS and IGAAP disclosures must be maintained simultaneously on your website
The Bottom Line
This is not a cosmetic regulatory tweak. IRDAI’s March 2026 amendment represents the most significant overhaul of insurance financial reporting in India in decades. The introduction of Ind AS 117, the annual cohort requirement, the CSM framework, and the explicit separation of accounting profit from distributable surplus all require deep changes in systems, processes, and the skills of finance and actuarial teams.
The good news: IRDAI has built in a deliberate transition infrastructure — the forbearance window, the Joint Expert Group, the parallel submission period, and the independent validation requirement all signal that the regulator understands this is a journey, not a single jump. Use those structures. The window to formally engage with them is open right now.
TaxRoutine will continue tracking guidance from the Joint Expert Group and any subsidiary instructions issued by IRDAI. Bookmark this page and subscribe for updates.
TaxRoutine decodes Indian taxation, regulatory compliance, and accounting standards for finance professionals, CFOs, and business owners. Content is prepared with reference to primary regulatory sources and is intended for informational purposes. Always consult a qualified professional for matters specific to your organisation.
