Financial Year 2012-13 (27 MB) - The New India Assurance Co. Ltd.

Leadership and Beyond(q)(r)(s)(t)Statutory surplus reserveAs required by Section 171 of the Insurance Act, 1980 of Trinidad and Tobago at least 25% of theCompany's profit from general insurance business, for the preceding year is to be appropriatedtowards a Statutory Surplus Reserve until such surplus equals or exceeds the reserves in respect ofits outstanding unexpired policies. This reserve is not distributable.Product classificationInsurance contractsInsurance contracts are defined as those containing significant insurance risk at the inception of thecontract. The significance of insurance risk is dependant on both the probability of an insured eventand the magnitude of its potential effect.Once a contract has been classified as an insurance contract, it remains an insurance contract for theremainder of its lifetime, even if the insurance risk reduces significantly during this period.Investment contractsAny contracts not considered insurance contracts under IFRS are classified as investment contracts.All contracts held by the Company as at December 31, 2012 have been classified as insurancecontracts.ClaimsReported outstanding general insurance claims comprise the estimated costs of all claims incurred butnot settled at the statement of financial position date, less any reinsurance recoveries. In estimating theliability for the cost of reported claims not yet paid, the Company considers any information availablefrom adjusters and information on the cost of settling claims with similar characteristics in previousperiods. Provision is made for claims incurred but not reported until after the statement of financialposition date. Differences between the provisions for outstanding claims and subsequent revisionsand settlement are included in the statement of comprehensive income in the year the claims aresettled.The estimation of claims incurred but not reported ("IBNR") is generally subject to a greater degreeof uncertainty than the estimation of the cost of settling claims already notified to the company, wheremore information about the claim event is generally available. Claims IBNR may often not be apparentto the insurer until many years after the event giving rise to the claims has happened.Insurance contract liabilitiesGeneral insurance contract liabilitiesGeneral insurance contract liabilities are based on the estimated ultimate cost of all claims incurredbut not settled at the reporting date, whether reported or not. Significant delays can be experienced inthe notification and settlement of certain type of general insurance claims, therefore the ultimate costof which cannot be known with certainty at the statement of financial position date.Provision for unearned premiumsThe proportion of written premiums attributable to subsequent periods is deferred as unearnedpremium. The change in the provision for unearned premium is taken to the income statement in theorder that revenue is recognized over the period of risk.ANNUAL REPORT263