The Insurance Regulatory Development Authority (IRDA) has so long been working for the interests of policyholders. Now it's the interests of the would-be shareholders of insurance companies that IRDA has initiated work on. As a prelude, the regulator has asked for a whole lot of disclosures from insurers on risk exposure, corporate governance and management of insurance companies so that potential equity investors can take informed decisions.

According to the regulator: "In a few months from now, several insurance companies will be completing 10 years, after which they may be allowed by the regulator to float initial public offers (IPO). IRDA feels it is essential that the investors are fully aware of the financial performance, company profile, financial position, risk exposure, corporate governance and management profile of insurers well before they hit the IPO market. The data has to be made available for at least four-five years in order to judge the performance of the companies in a reasonable fashion."

The regulator feels public disclosure of risks faced by insurers is critical for ensuring a fair and orderly insurance sector. The disclosures will need to be reliable and timely to ensure efficiency of the markets. The markets have to provide necessary feedback to the insurance regulator to ensure safety of the investors as well as the policyholders.

IRDA, now, proposes to bring out guidelines for the public disclosure for insurance companies to be with effective from November 1, 2009. The disclosures proposed are largely along lines with the standards prescribed by the International Association of Insurance Supervisors (IAIS).

The disclosures proposed are a subset of the quarterly and annual returns, which have already been prescribed by IRDA. The disclosures proposed are grouped into company profile, investment profile, liability valuation, risk concentration, solvency and business statistics.

Additional disclosures that need to be submitted include sensitivity analysis, related party transactions and reinsurance risk concentration. Sensitivity analysis attempts to find out how projected performance of a company varies along with changes in the key assumptions on which the projections are based.