Professional Documents
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Insurance Accounting
Insurance Accounting
Insurance Accounting
“ALBERTO ADRIANI”
ACCOUNTING
OF
INSURANCE
March 2014
General objective
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Programmatic content
BASIC DEFINITIONS:
> Accounting
> Entity
> Commercial Operation
> Registry of Commercial Operations
> Accounts: Real and Nominal
> Accounting Cycle
> Equity Equation
> The check
> Structure of the Financial Statements
> Legal Regulations that Regulate the Accounting Operations of
Insurance Companies
> Accounting of Insurance companies: Single Plan of Accounts, Main
Operations of the Financial Statements, Records of Accounting
Operations.
> Assumptions of Accounting Records.
Insurance Accounting
Prepared by: Lcdo.Roman Riera
It is a technique that systematically and structurally produces
quantitative information expressed in monetary units, about
economic events. identifiable and
quantifiable actions carried out by an entity through a
process of chronological capture of operations that clearly
measures, classifies, records and
summarizes; in order to provide
pertinent information in order to
interpret the results obtained and
improve decision making.
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Entity
It is an identifiable unit that carries out economic activities,
made up of human, material and financial resources;
coordinated by an authority that decides based on compliance
with the objectives that gave rise to it.
Commercial Operation
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Registration of the
Commercial Operations
Insurance Accounting
Prepared by: Lcdo.Roman Riera
They are the economic resources (assets and rights) that a business possesses and that
are expected to produce benefits in the future.
ASSET
R
AND
They are the debts and
TO obligations contracted, for which
the entity releases a resource.
l
AND
Yes
It is the participation of the
owners in the resources of the
business.
Insurance Accounting
Prepared by: Lcdo.Roman Riera
N They are the operations
that allow the business to
INCOME receive resources from
EITH the sales of goods or
provision of services.
ER
M
Yo
N
TO They are the necessary
expenditures in order to
l EXPENDITURE
(Cost or
generate income in the
usual operations of the
AND Bills) business.
Yes
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Accounting Cycle
Equity Equation
ASSET
PASSIVE CAPITAL
What it has
What you owe What you owe
(Goods and
to to
Rights)
third parties their owners
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Accounting Entry: technical formula for recording or noting transactions
under the Double Entry principle
Account
Name given to the group of
assets, rights and obligations
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Structure of the Financial Statements
Profit or Loss
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Legal regulations that define and regulate the
accounting operations in companies
Insurance
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Background
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Regulated
Subjects
Insurance Accounting
Prepared by: Lcdo.Roman Riera
nsurance Activity Law
FUNCTIONING
FIRST
Art. 34 to 43
BOOKINGS
SECOND
Art. 44 to 62
SOLVENCY MARGIN
THIRD
Art. 63 to 65
ACCOUNTING
QUART
Art. 66 to 72
ER
BONDS
FIFTH Art. 73
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Insurance Company Accounting
The law has allowed control organizations to dictate accounting standards, since
part of the resources that companies manage are not only those of the
shareholders, but on the contrary, most of them belong to the public.
Characteristics:
1. It is specialized accounting.
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Regulation of Accounting for Insurance
Companies
Legal Bases
Location LAW 2010 REGULATION 1999
Chapter III V
Section Quarter Third
Articles 66 to 72 92 to 95
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Regulation of Accounting for Insurance
Companies
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Financial statements
Basic Structure of the Single Plan of Accounts
State
Profits and
Losses
300
EXPENSE
S
500
INCOME
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Financial statements
Most notable games of the States
Financial: Statement of Financial Position
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Financial statements
Most notable items of the Financial Statements: Performance Statement
INCOME EXPENSES
Premiums Collected: Main Benefits and claims paid
source of money for the
company
Technical Reserves from the Technical Reserves of
previous year Exercise
Acquisition Expenses /
Claims Paid by Reinsurers
Returns
General management of the Assigned Premiums
company
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Accounting Records
MAIN TRANSACTIONS
Issuance of
Receipt of
Cousin
Full payment?
Financed Collection
Premium? of
Receipt
of
Financed With Intermediary?
Payment?
Pay of
Commiss
ion
Without an
intermediary?
IUJ
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Public Securities: On 03/20/2006 public securities were acquired in
Bs.500,000,000.00. The nominal value is Bs.600,000,000.00. As of 03/31/2006,
public securities are quoted in the market at 80% of their nominal value.
Purchase Registration
Code Name Has to To have
202-02 Public Values 500.000.000
201-01 Available 500.000.000
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Valuation record
Code Name Has to To have
381-04 Adjustment of securities and other 20.000.000
assets
408-04 Reserve for devaluation of 20.000.000
securities
Now, we assume that as of 03/31/2006 the security had a market price of 120% of its
face value.
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Registration of revaluation
Code Name Has to To have
201-02 Public Values 220.000.000
410-01 Reserve for revaluation of 220.000.000
securities
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Built Urban Premises: The IUAA Insurance Company, CA acquires land with its
corresponding building in order to carry out its operations for an amount of
Bs.100,000,000.
Purchase Registration
Code Name Has to To have
201-06 Built urban properties 100.000.000
201-01 Available 100.000.000
Considerations:
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Share Capital: On 01/31/2013 an insurance company is established, whose share
capital amounts to Bs. 5,000,000,000; which was established by Bs. 2,000,000,000 in
cash deposited in cash and the rest in the construction for the company facilities.
Capital Registry
Code Name Has to To have
201-01 Available 2.000.000.000
201-06 Built Urban Premises 3.000.000.000
409-01 Social capital 5.000.000.000
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Issuance of Premium Receipts: On 12/04/2006, Premium Receipts are issued with
a validity of 365 days, detailed as follows:
HCM= Bs. 2.500.000.000
CAR= Bs. 3.000.000.000
FIRE= Bs. 1.500.000.000
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Premiums Collected: On 12/14/2006 the premium receipts issued were collected in
full, with the exception of the fire branch for which only 80% was collected.
HCM= Bs. 2.500.000.000
CAR= Bs. 3.000.000.000
FIRE= Bs. 1.200.000.000
Premium Receipts Issuance Record
Code Name Has to To have
201-01 Available 6.700.000.000
501-01 Exercise bonuses 2.500.000.000
521-01 Exercise bonuses 4.200.000.000
412-01 Premiums Issued for 6.700.000.000
Collection
Premiums Issued for
212-01 6.700.000.000
Collection
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Constitution of Reserves: He 15/02/2006 was charged
Bs.200,000,000 for general insurance premium. The validity of the policy is 365
days; that is: expires on 02/14/2007
What happened
EFM
Insurance Accounting
Prepared by: Lcdo.Roman Riera
Operations Log:
Constitution of Reserves:
Premium Reserve = 2,000,000,000 / 365 = Bs.547,945
Insurance Accounting
Prepared by: Lcdo.Roman Riera
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force is the will.”
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