FINAL ACCOUNTS OF GENERAL INSURANCE COMPANIES

The final accounts of general insurance companies are required to be prepared as prepared by IRDA Regulations, 2002:

a. Revenue Account (Form B - TRA) 

A separate Revenue Account (Form B - RA) is prepared for every type of business eg, fire, marine etc, It records the incomes and expenses of a particular business and profit loss is transferred to the Profit and Loss Account,

b. Profit and Loss Account (Form B - PL) 

It records incomes and expenses of general nature, and it shows how the profit has been appropriated, in addition to, profit / loss of different business. Its balance is shown in the balance sheet.

C, Balance Sheet (Torm B - BS)

It records various assets and liabilities of the general insurance companies.
It must be observed that difference in revenue account reveals profit or loss of business. The revenue account is closed by transfer to respective fund account viz. , fire fund, marine fund etc,

Reserve for Unexpired Risks 

General insurance policies are normally issued for short s renewable every year. On the accounting date, some of the contracts for which premium is received may be still term alive and hence represent unexpired risk. A suitable provision is made for that unexpired risk on a general basis out of premiums received on current accounting year. Schedule II B of the IRDA regulations, 2000 lays down that the reserve for unexpired risk shall be, in respect of the following;

(i) Fire business, 50 percent
(ii) Miscellaneous business, 50 percent
(iii)Marine business other than marine hull business, 50 percent, and
(iv) Marine hull business, 100 percent of the net premium.

To ascertain the surplus of a general insurance business s reserve for unexpired risk is also to be adjusted in the Revenue Account.

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