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October 2024

Ind AS 117 – Insurance Contracts

By Mohan R Lavi, Chartered Accountant
Reading Time 12 mins

INTRODUCTION

We have got used to the Ministry of Corporate Affairs (MCA) introducing new Accounting Standards at the end of a financial year. Both Ind AS 115 — Revenue from Contracts with Customers and Ind AS 116 — Leases were announced in the end of March. One would have thought that the same pattern would play out for the implementation of Ind AS 117 — Insurance Contracts. However, the MCA pulled a surprise on 12th August, 2024 by not only announcing the Standard but also making it applicable for the Financial Year 2024–25. Ind AS 117 is a much more detailed and comprehensive standard than Ind AS 104 – Insurance Contracts. Ind AS 117 takes into account that the insurance and banking industries provide services that complement each other. Ind AS 117 acknowledges this and takes us back to Ind AS 109 wherever there is a trace of a financial instrument in an insurance contract. Ind AS 117 is a detailed standard: the standard has 132 main paragraphs, 154 paragraphs of application guidance, 22 definitions and 57 paragraphs on transition provisions.

SCOPE

Ind AS 117 defines an insurance contract as “A contract under which one party (the issuer) accepts sign

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