Accounting for direct insurance operations
The bulk of the income of insurance organizations is formed from insurance premiums (contributions) paid by policyholders in accordance with the insurance contract or in accordance with the law.
Insurance premium (fee) is the insurance premium that the policyholder must pay to the insurer in accordance with the insurance contract (for voluntary insurance) or with the law (with compulsory insurance).
The insurance premiums (payments, contributions) of the insured constitute the income of the insurance organization. From the received premiums the insurance organization forms insurance reserves, and the formed insurance fund allows to conduct investment activity.
To account for information on insurance premiums (contributions) accrued in the reporting period, but for direct insurance and co-insurance contracts entered into by the insurance organization, an account 92 is designated. This account reflects insurance premiums due to insurance companies, insurance agents and insurance brokers ). Accounting for insurance premiums is determined by the accrual method. Analytical accounting is conducted in the directions established by the insurance organization, but first of all it is accounting for types of insurance and insurance contracts.
The amounts of accrued insurance premiums (contributions) due from insured persons in the reporting period under insurance contracts are reflected in the sub-account 92.1 credit in correspondence with the subaccount debit 78.1.
In accounting, insurance premiums are reflected when the insurance company's right to receive an insurance premium (contribution) from the insured occurs. The right to receive an insurance premium is derived from the insurance contract or is confirmed by law. Under insurance contracts relating to insurance other than life insurance, the entire amount of the insurance premium provided for under the insurance contract is charged. Under life insurance contracts, if premiums (premiums) are paid periodically, then in the accounting record is made at the time when the insurer's right to receive the next insurance premium arises.
When concluding an insurance contract through insurance agents and insurance brokers, records are kept but to the sub-account 92.1 in correspondence with the debit of the subaccount 78.5.
Receipt of contributions of the insurance organization is reflected in the accounting record:
- debit account 50 "Cashier", 51 "Settlement account", 52 "Currency account";
- the sub-account 92.1.
If the policyholder fails to fulfill the obligation to pay the insurance premium in accordance with the insurance contract and the impossibility of collecting it in accordance with the legislation and the insurance contract, and if the insurance contract is declared invalid for the amount of the accrued insurance premium (contribution), < strong> reversed entry.
In case of non-payment of the insurance premium in the terms established by the contract, the debt is considered doubtful to be received. For doubtful debts, a reserve is created at the expense of other revenues. The creation of a provision is reflected in the accounting records:
- debit account 91 "Other income and expenses";
- loan account 63 "Reserves for doubtful debts".
Such debt, paid by the insured, is reflected in the accounting entry:
- debit account 51 Current account & quot ;;
- sub-account credit 78.1 "Calculations on insurance premiums (contributions) with policyholders".
The amount of the provision for doubtful debts created is written off by the accounting entry:
- debit account 63 "Reserves for doubtful debts";
- credit account 91, "Other income and expenses."
At the end of the reporting period, the credit balance of subaccount 92.1 is debited to account 99.
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