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IAI Actuarial Core Principles · Business Finance · Regulation of financial reporting of incorporated entities

Which statement about the actuary's role in the financial reporting of an Indian life insurance company is correct?

The Appointed Actuary values and certifies the policy liabilities that appear in the insurer's financial statements, following IRDAI valuation rules. Auditors rely on this work rather than recomputing it, and liabilities rest on prudent actuarial assumptions about future cash flows, not simply on premiums received.

  1. AThe Appointed Actuary certifies the policy liabilities and the valuation of them used in the financial statementsCorrect
  2. BThe statutory auditor calculates policy liabilities independently of any actuarial input
  3. CThe registrar of companies determines the bonus rates declared each year
  4. DThe company secretary signs off the actuarial valuation
  5. Policy liabilities are set equal to premiums received to date

Explanation

The Appointed Actuary values the policy liabilities and certifies that the valuation follows IRDAI regulations and professional guidance. Auditors rely on that certification and do not compute the liabilities. Liabilities are based on prudent actuarial assumptions about future cash flows, not on premiums received.

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