IRDA COMMITTEE RECOMMENDS EMBEDDED VALUE

A sub-committee established by India’s Insurance Regulatory & Development Authority (IRDA) has recommended that the embedded value method be used to value life assurers, reports India’s Economic Times . IRDA chairman noted that India currently used the New Business Achieved Profit (NBAP) method. IRDA chairman CS Rao said that “though it is still early for the insurance industry in India, embedded value, as a concept, will have to be eventually adopted by companies”. Overseas investors have observed that NBAP necessarily makes assumptions based on business not yet written. Bert Paterson, managing director of India-based Aviva Life, noted that EV, linked to NBAP would be a “more balanced” way of evaluating a company.