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

Leadership and BeyondBalances arising from insurance contracts primarily include premiums and unearned premiums, provisionsfor unpaid claims and adjustment expenses, the reinsurers share of provisions for unearned premiumsand unpaid claims and adjustment expenses, deferred policy acquisition expenses and salvage andsubrogation receivables.xixReinsurance contracts heldThe Company holds the under-noted reinsurance contracts:• Treaty Reinsurance Outward is usually between the Company and Reinsurers.• Facultative Reinsurance Outward is usually between the Company and other insurance companies orbetween the Company and Reinsurers.• Facultative reinsurance inwards is usually between the Company and other insurance Companies orbetween the Company and Reinsurers.Premiums due to the reinsurers are paid and all claims and recoveries due from reinsurers are received.Contracts entered into by the Company with reinsurers under which the Company is compensated forlosses on one or more contracts issued by the Company and that meet the classification requirements forinsurance contracts are classified as reinsurance contracts held. Contracts that do not meet theseclassification requirements are classified as financial assets. Insurance contracts entered into by theCompany under which the contract holder is another insurer (inward reinsurance) are included withinsurance contracts.The benefits to which the Company is entitled under its reinsurance contracts held are recognized asreinsurance assets. These assets consist of short-term balances due from reinsurers, as well as longerterm receivables that are dependent on the expected claims and benefits arising under the related reinsuredinsurance contracts. Amounts recoverable from or due to reinsurers are measured consistently with theamount associated with the reinsured insurance contracts and in accordance with the terms of eachreinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts andare recognized as an expense when due.The Company assesses its reinsurance assets for impairment annually. If there is objective evidence thatthe reinsurance asset is impaired, the Company reduces the carrying amount of the reinsurance asset toits recoverable amount and recognizes that impairment loss in the statement of profit and loss and othercomprehensive income. The Company gathers objective evidence that a reinsurance asset is impairedusing the same processes adopted for financial assets held at amortized cost. The impairment loss iscalculated following the same method used for these financial assets.Receivables and payables are recognized when due. These include amounts due to and from agents,brokers and insurance contract holders.If there is objective evidence that the insurance receivable is impaired, the Company reduces the carryingamount of the insurance receivable accordingly and recognizes the impairment loss in the statement ofprofit and loss and other comprehensive income. The Company gathers the objective evidence that aninsurance receivable is impaired using the same process adopted for loans and receivables.ANNUAL REPORT335