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Insurance Companies Accounts

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Insurance Companies Accounts

  1. 1. INSURANCE COMPANIES ACCOUNTS <ul><li>LIFE INSURANCE </li></ul><ul><li>GENERAL INSURANCE </li></ul><ul><li>LIFE INSURANCE: </li></ul><ul><li>TYPES OF ISURANCE </li></ul><ul><li>CORPORATION GURANTEES TO PAY A CERTAIN SUM OF MONEY TO THE POLICY HOLDER ON REACHING A CERTAIN AGE OR DEATH WHICHEVER IS EARLIER. </li></ul><ul><li>2. GENERAL INSURANCE: OTHER TYPES OF INSURANCE EXCEPT LIFE INSURANCE; EX. FIRE,MARINE ,ACCIDENT,FIDELITY, THIRDPARTY AND CONSEQUENTIAL LOSS INSURANCE. </li></ul>
  2. 2. ACCOUNTS <ul><li>TWO TYPES OF BOOKS </li></ul><ul><li>1. STATUTORY BOOKS: </li></ul><ul><li>A. REGISTER OF POLICIES </li></ul><ul><li>B. REGISTER OF CLAIMS </li></ul><ul><li>C. THE REGISTER OF LICENCED INSURANCED INSURANCE AGENTS </li></ul><ul><li>2. SUBSIDIARY BOOKS </li></ul><ul><li>CASH BOOK, PREMIUM CASH BOOK, BRANCH CASH BOOK, PETTY CASH BOOK,CLAIM CASH BOOK, COMMISSON REGISTER, LAPSED AND CANCELED OLICIES BOOK, INVESTMENT LEDGER. </li></ul>
  3. 3. Annual accounts: form of revenue account of life insurance <ul><li>DEBIT SIDE </li></ul><ul><li>1.CLAIM </li></ul><ul><li>2.ANNUITY </li></ul><ul><li>3.SURRENDER VALUE </li></ul><ul><li>4.BONUS INCASH </li></ul><ul><li>5. BONUS IN REDUCTION OF PREMIUM </li></ul><ul><li>6.EXPENSES OF MGT. </li></ul><ul><li>7-9.BAD DEBTS,TAXESAND OTHER EXP. </li></ul><ul><li>10.LIFE ASSURANCE FUND </li></ul><ul><li>CREDIT SIDE </li></ul><ul><li>LIFE ASSURANCE FUND </li></ul><ul><li>PREMIUM </li></ul><ul><li>CONSIDERATION FOR ANNUITIES GRANTED </li></ul><ul><li>INTEREST, DIVIDEND AND RENT </li></ul><ul><li>REGISTRATION FEES </li></ul><ul><li>REINSURANCE </li></ul>
  4. 4. 1.CLAIMS <ul><li>ALL CLAIMS INTIMATED AND ACCEPTED+NOT ACCEPTED AT THE END+EXPENSES RELATING TO CLAIM- REINSURANCE RECOVERY </li></ul><ul><li>AMOUNT PAYABLE BY INSURANCE COMPANY </li></ul>
  5. 5. 2.ANNUITIES <ul><li>IT IS AN EXPENSE </li></ul><ul><li>ANNUAL PAYMENTS BY INSURANCE COMPANY TO THE PERSONS FOR A LUMP SUM RECEIVED SOME YEARS BACK </li></ul>
  6. 6. SURRENDER VALUE <ul><li>IF THE PREMIUM CAN NOT BE PAID ANY MORE BY THE PERSON WHO HAD TAKEN INSURANCE THEN HE/SHE IS ALLOWED TO SURRENDER TO THE INSURANCE COMPANY AFTER THREE YEARS FROM THE DATE OF INSURANCE POLICY TAKEN . INSURANCE COMPANY PAYS A LUMP SUM BASED ON SOME CALCULATIONS. CALCULATION:SURRENDER- REINSURANCE </li></ul>
  7. 7. BONUS IN CASH <ul><li>BONUS PAID TO THE POLICY HOLDER BY THE INSURANCE COMPANY </li></ul><ul><li>CALCULATION:(BONUS IN CASH) </li></ul><ul><li>MINUS </li></ul><ul><li>(REINSURANCE FROM OTHER INSURANCE COMPANIES) </li></ul>
  8. 8. BONUS IN REDUCTION OF PREMIUM <ul><li>INSURANCE COMPANY MAY REDUCE PREMIUM INSTEAD OF GIVING BONUS IN CASH TO THE POLICY HOLDER </li></ul><ul><li>METHODS:1. Bonus is an expense-debit revenue a/c </li></ul><ul><li> 2. Add to the premium in the credit side with the premium </li></ul>
  9. 9. 6.EXPENSES OF MANAGEMENT <ul><li>They can be given either in the revenue account or a separate schedule can be prepared and the net amount can be shown in the revenue account </li></ul>
  10. 10. 7-9. BAD DEBTS,TAXES AND OTHER EXPENDITURE <ul><li>THEY ARE SHOWN SEPARATELY ON THE DEBIT SIDE OF THE REVENUE ACCOUNT </li></ul>
  11. 11. 10.LIFE INSURANCE FUND <ul><li>THE DIFFERENCE BETWEEN THE CREDIT SIDE AND THE DEBIT SIDE IS NOT PROFIT . </li></ul><ul><li>IT IS KNOWN AS LIFE ASSURANCE FUND </li></ul>
  12. 12. CREDIT SIDE <ul><li>1.LIFE ASSURANCE FUND : </li></ul><ul><li>THE BALANCE IN THE LAST YEAR REVENUE ACCOUNT CREDIT BALANCE </li></ul>
  13. 13. 2. premium <ul><li>Premium received from policy holder </li></ul><ul><li>ADD: </li></ul><ul><li>Premium yet to be received at the end </li></ul><ul><li>BONUS IN REDUCTION OF PREMIUM </li></ul><ul><li>LESS : </li></ul><ul><li>OUTSTANDING PREMIUM AT THE BEGINNING </li></ul><ul><li>PREMIUM PAID FOR REINSURANCE TO OTHER INSURANCE COMPANIES </li></ul>
  14. 14. CONSIDERATION FOR ANNUITIES GRANTED <ul><li>LUMPSUM RECEIVED BY INSURANCE COMPANY INORDER TO GIVE ANNUITIES IN FUTURE </li></ul><ul><li>IT IS AN INCOME </li></ul>
  15. 15. 4. INTEREST DIVIDEND AND RENT RECEIVED /RECEIVABLE <ul><li>DEDUCT: INCOME TAX PAID ON SUCH INCOME </li></ul>
  16. 16. REGISTRATION FEES <ul><li>APPLICATION FORM FEES COLLECTED </li></ul><ul><li>AGENTS’ REGISTRATION FEES COLLECTED </li></ul><ul><li>INCOME </li></ul>
  17. 17. RE-INSURANCE ACCEPTED <ul><li>INSURANCE COMPANY ACCEPTS A BUSINESS FROM OTHER COMPANIES AND RECEIVES PREMIUM THEN IT IS AN INCOME </li></ul><ul><li>IF COMPANY RE INSURANCE TO OTHER INSURANCE COMPANY IT PAYS PREMIUM THEN IT IS AN EXPENDITURE </li></ul><ul><li>BUT RECEIVES COMMISSION FOR GIVING BUSINESS TO OTHER COMPANIES THEN THE COMMISSION IS INCOME KNOWN AS COMMISSION ON REINSURANCE CEDED THEN IT IS INCOME </li></ul>
  18. 18. BALANCE SHEET <ul><li>LIABILITIES </li></ul><ul><li>1. SHARE CAPITAL </li></ul><ul><li>2.RESERVE OR CONTINGENCY ACCOUNTS </li></ul><ul><li>3.BALANCE OF FUND ACCOUNT </li></ul><ul><li>4. LOANS AND ADVANCES </li></ul>
  19. 19. BALANCE SHEET <ul><li>ASSETS </li></ul><ul><li>1.LOANS GIVEN TO OTHERS </li></ul><ul><li>2. INVESTMENTS IN GOVERNMENT SECURITIES, SHARES IN OTHER COMPANIES </li></ul><ul><li>3 .AGENTS’ BALANCES </li></ul><ul><li>4 . OUTSTANDING PREMIUMS </li></ul><ul><li>5 .INTEREST, DIVIDENDS AND RENT DUE BUT NOT RECEIVED AT THE END OF THE YEAR </li></ul><ul><li>6. AMOUNTS DUE FROM OTHERS AND OTHER INSURANCE COMPANIES FOR COMMISSION OR PREMIUM YET TO BE RECEIVED </li></ul>
  20. 20. LOSS <ul><li>TRANSFERRED TO P/L A/C </li></ul><ul><li>DEBIT SIDE CAN NOT BE MORE THAN THE CREDIT SIDE </li></ul>
  21. 21. EXERCISE-1 <ul><li>COMMISSION TO AGENTS? </li></ul><ul><li>BONUS TO POLICY HOLDERS? </li></ul><ul><li>CONSIDERATION FOR ANNUITIES? </li></ul><ul><li>LIFE ASSURANCE FUND? </li></ul><ul><li>RENT OUTSTANDING? </li></ul><ul><li>BONUS UTILISED IN REDUCTION OF PREMIUM? </li></ul><ul><li>SURRENDERS? </li></ul>
  22. 22. EXERCISE 2 <ul><li>CLAIMS INTIMATED AND ADMITTED BUT NOT YET PAID? </li></ul><ul><li>CLAIMS INTIMATED BUT NOT ADMITTED? </li></ul><ul><li>PROVISION FOR INCOME TAX? </li></ul><ul><li>INCOME TAX PAID? </li></ul><ul><li>CONSIDERATION FOR ANNUITIES GRANTED? </li></ul><ul><li>REGISTRATION FEES ? </li></ul><ul><li>CONTINGENCY RESERVE? </li></ul>

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