ACCOUNTS FOR INSURANCE

COMPANIES
Sub: Advanced Financial Accounting
Level: M.COM-I

DELIVERED TO: DELIVERED BY:

SIR. ARISH AHMED SHAFIQUE AHMED
Roll No BR-546647
 DEFINITION

An arrangement by which a company or the

state undertakes to provide a guarantee of
compensation for specific loss, damage,
illness or death in return of periodic payment

As per IFRS – 4: "contract under which one

party (the insurer) accepts significant insurance
risk from another party (the policyholder) by
agreeing to compensate the policyholder if a
specified uncertain future event (the insured
event) adversely affects the policyholder." [IFRS
4.Appendix A]
TYPES OF INSURANCE

There are two main types of Insurance:

1. Life Insurance
2. General Insurance
TYPES OF INSURANCE

1. Life Insurance
Insurance companies promise to pay a particular
amount to the insured on the death or expiry of the
policy
 TYPES OF INSURANCE

2. General Insurance
Protects against losses and damages other than those
covered in life insurance
Categories of General Insurance:
a. Fire Insurance
b. Marine Insurance
c. Misc Insurance
ACCOUNTS FOR INSURANCE COMPANIES

1. Revenue Accounts

2. Profit & Loss Accounts

3. Balance Sheet
ACCOUNTS FOR INSURANCE COMPANIES

1. Revenue Accounts
Premium income can refer to the proceeds
that an investor earns from writing an
options contract or the revenue that an
insurance carrier earns from policyholders'
periodic premium payments
ACCOUNTS FOR INSURANCE COMPANIES

2. Profit & Loss Accounts

General incomes and expenses not
belonging to a particular business are
recorded in it and balance of profit or loss is
transferred to Profit and Loss Appropriation
Account
ACCOUNTS FOR INSURANCE COMPANIES

3. Balance Sheet
It shows various assets and liabilities of
general insurance companies. Performa of
Balance Sheet is same for general and life
insurance companies
ACCOUNTS FOR INSURANCE COMPANIES
1. Format of Revenue Account
S No Particular Schedule Amount Amount
A. INCOME
1. Premium earned (Net) 1
2. Other income -
3. Changes in provision for unexpired risk -

4. Interest, dividend and rent received -

Total (A)

B. EXPENSES
5. Claims incurred (Net) 2
6. Commission 3
7. Operating expenses 4

Total (B)
Operating Profit /loss form Fire/Marine (A-B)
ACCOUNTS FOR INSURANCE COMPANIES
2. Format of Profit & Loss Account
S No Particulars Schedule Amount
1 Operating Profit -
Fire -
Marine -
2 Income from investment -
3 Other Income -
Share/ Fees -
Difference in exchange -
Miscellaneous receipt -
Total (A)
4 Provision other than tax -
5 Expenses of Management -
6 Other Expenses -
Loss on Sale of Furniture -
Total (B) -
Profit before tax (A-B) -
(-) Provision for Tax -
= Provision after tax -
(+) Profit B/F of Previous year -
(-) Appropriations -
Transfer to any reserve -
ACCOUNTS FOR INSURANCE COMPANIES
3. Format of Balance Sheet
S No Particulars Schedule Amount
1 SOURCES of FUNDs -
Share Capital 5 -
Reserve & Surplus 6 -
Borrowings 7 -
= Total -
2 APPLICATION OF FUNDs -
Investment 8 -
Loan & Advances 9 -
Fixed Assets 10 -
3 Current Assets
Cash and Bank Balance 11
Advances & Other assets 12
(A)
4 Current Liabilities -
Other Liabilities 13 -
Provisions 14 -
(B) -
Thank you….