Internal Reporting and Accounting Treatment of Claims in Insurance Companies
Internal Reporting and Accounting Treatment of Claims in Insurance Companies

Author(s): Sanja Tominac
Subject(s): Politics / Political Sciences, Economy, Business Economy / Management, Governance, Accounting - Business Administration
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: insurance companies; types of insurance; claims; technical reserves; internal reporting
Summary/Abstract: Insurance companies' main purpose is to protect against the consequences of future harmful events. The claims covered by insurance companies are described in the insurance contracts and depend on the type of insurance. Technical provisions are a very important item in insurance companies, which insurance companies must form in order to cover all obligations arising from insurance contracts and possible losses due to risks from insurance transactions. Companies are obliged to form technical provisions in accordance with accounting regulations, depending on which insurance or reinsurance business they conduct. In the event of a loss event, the first step is to report the loss to the insurance company. Only after the report is the turn for the insurer to review the event and assess whether the loss event is covered by the insurance contract. If this is the case, the insurance companies are obliged to pay the insured person or a third party the contractually agreed amount. Internal reporting is very important in insurance companies, as it provides management with information about the (financial and non-financial) activities of the company and management makes decisions and conducts business on the basis of this information.

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