Insurance

Accounting

MEMBER FACILITATOR
Lic. Carlos Bonillo Genesis Garrido 20,170,448
Jesús Millán 11,146,411
Maggyorys Garrido 12,359,950
Victor Hernandez 14,132,230
Yelimaria Piña 26,896,115
CP PROSC. 02 - PHASE I – T4

May, 2021
 INTRODUCTION

Protecting our assets and being financially supported in the event of an

unfortunate event is a benefit that we can all count on and that is also
necessary as we obtain insurable assets. In this sense, like in any other
company, various activities are carried out by an insurance company.

Insurance works on the basic principle of: transferring risk. This means that
it is reasonable to take responsibility for periodically making small payments,
in the face of the possibility of large loss or damage. That is, instead of risking
losing a large amount, it is preferable to voluntarily pay a smaller amount (the
cost of the insurance), reducing the risk.

Today there are many forms of insurance: life, health, home and
automobile are just a few. When you buy insurance, you join many others
who pay money to an insurance company. The insurance company uses the
money collected to pay claims filed by those who have hired its services.
Money is “pooled” and losses and expenses are shared.

It is for this reason that insurance accounting is very important, which is

based on the theoretical bases of accounting, its principles, standards,
concepts, structure and process, etc. Furthermore, insurance accounting is a
system itself, since it involves a process and an entire context related to
insurance transactions. Insurance accounting can also be considered a useful
tool that interprets the language of insurance-related business.

Insurance Companies

They are organizations specialized in selling coverage designed to help

protect contracting parties against loss, theft or damage, that is, they are
companies that are dedicated to the sale of insurance and whose economic
activity is based on offering a security service, covering certain economic
risks, the economic units of production and consumption.

Its activity focuses on an operation to gather wealth through the

contribution of the contractors and in this way ensure economic support in the
event of an unfavorable economic event, normally called a loss. Additionally,
they can provide various types of policies, such as property and casualty, life
and health insurance, focused on individuals or companies, all depending on
the needs of the people.

Legal Regulations that Regulate the Accounting Operations of

Insurance Companies

Año Marco Legal Artículo

1942 Código Civil de Venezuela 1.800, 1.865
Derogó los artículos del
2001 Ley de Contrato de Seguros Código de Comercio
Ley de Empresas de Seguros y
1994 Reaseguros
Reglamento de Ia Ley de Empresas de
1999 Seguros y Reaseguros
18,23 parágrafo
sexto,27 numeral 10 y
1995 Ley de impuesto sobre Ia Renta 38,18;72 y 73, 94.
Ley Orgánica de Procedimientos
1998 Administrativos (LOPA)
Reglamento de Ia Ley de Impuesto sobre
Ia Renta
Resoluciones Oficinales
Resoluciones o Providencias que emita
Ia SUDASEG

Insurance Company Accounting

It is that branch of accounting that studies the financial statements of

institutions intended to insure external risks through the subscription of an
insurance contract, with the purpose of giving the maximum guarantee to the
insured that their claims will be compensated to their beneficiaries. , that the
acquired rights will be paid to them and that the part of their unconsumed
premium will be returned to them, even in the event that the insurer suspends
its payments, goes bankrupt or does not have sufficient funds.

In other words, insurance accounting is the technique used to collect,

record and summarize all the operations carried out during a year by
insurance and reinsurance companies. And, as mentioned above, it is
supervised or controlled by a government or state entity, in the case of
Insurance, the Superintendence of Insurance Activity (SUDASEG).

Single Account Plan

The Single Account Plan is an instrument designed to harmonize and unify

the accounting system in the different sectors of the Venezuelan economy
whose purpose is to improve the quality, transparency and comparability of
accounting information and generate multiple benefits for its users. It is
composed of a catalog of accounts and the description and dynamics for their
application, which must be observed in the accounting record of all economic
operations or transactions.

Insurance accounting in our country is carried out under the definition of a

Single Plan of Accounts, defined by the supervisory entity of the specific
economic activity, in our case the single plan of accounts, established in
Ruling No. HSS-100. -001 dated January 20, 1992, published in the Official
Gazette of the Republic of Venezuela No. 4,383 extraordinary dated February
19 of the same year, through which the Superintendency of Insurance Activity
issued the Accounting Standards for companies insurance.
Insurance Plan of Accounts Structure
Balance de situación financiera
Cod. Rubro o Cuentas
200 ACTIVO
201 Inversiones Aptas para la Representacion de las Reservas Técnicas
202 Garantía a la Nación
203 Inversiones no Aptas para la Representación de las Reservas Técnicas
204 Cuentas de Reaseguro
205 Reservas A Cargo De Reaseguradores Y Retrocesionarios
206 Activos Depreciables Y Amortizables
207 Cuentas Deudores Di Veras
208 Activos Transitorios
209 Otros Activos
212 Cuentas De Orden
400 PASIVO
401 Reservas Tëcnicas
402 Obligaciones A Pagar
403 Cuentas Acreedoras Diversas
404 Cuentas Acreedoras Por Reaseguro
405 Depósitos Constitutidos Por Reaseguradores Y Retrocesionarios
406 Pasivos Transitorios
407 Reservas De Previsión
408 Reservas De Devaluación
409 CAPITAL
410 Superavit No Realizado
412 Cuentas De Orden

Estado de Demostración de Pérdidas y Ganancias

Cod. Rubro o Cuentas
300 GASTOS
301 Operaciones Seguros De Personas
321 Operaciones Seguros Generales
341 Operaciones De Reaseguro Aceptado
381 Gestión General De La Empresa
500 INGRESOS
501 Operaciones Seguros De Personas
521 Operaciones Seguros Generales
541 Operaciones De Reaseguro Aceptado
581 Gestion General De La Empresa

Main Operations of the Financial Statements

 Insurance companies process a large number of transactions, mainly the
collection of premiums and the payment of benefits, which is why it is
necessary for them to use sophisticated computer equipment to process the
information. The organization and optimal functioning of the accounting
system is an objective of the administrative director of accounting. Financial
analysts must carry out an analysis of the existing controls in the system used
by the company.

Record of Accounting Operations

The balance sheet, the profit and loss account and the memory form a unit;
so that the true image that the annual accounts of the insurance entities must
provide will be obtained from the joint consideration of these documents. The
application of the accounting principles included in the following sections
should lead to the annual accounts, formulated clearly, expressing a true
image of the assets, financial situation and results of the company.

In those exceptional cases in which the application of its principle or any

other accounting standard is not appropriate because it is incompatible with a
true and fair view, its application will be considered inadmissible. This
exceptionality will be mentioned in the explanatory notes, explaining its
motivation and indicating its influence on the assets, financial situation and
results of the entity.

Structure of Financial Statements

1. The balance

All insurance companies have the obligation to prepare, at the end of each
financial year, the balance sheet that the control body must send along with
 the report of their activities. The profit and loss account and the rest of the
required documentation.

The balance sheet has the following structure:

ACTIVO PASIVO
Efectivo y otros activos líquidos equivalentes. Pasivos financieros mantenidos para negociar
Otros pasivos financieros a valor razonable con cambios en
Activos financieros mantenidos para negociar. pérdidas y ganancias.
Otros activos financieros a valor razonable con cambios en
pérdidas y ganancias. Débitos y partidas a pagar.
Activos financieros disponibles para la venta. Derivados de cobertura
Préstamos y partidas a cobrar. Provisiones técnicas
Inversiones mantenidas hasta el vencimiento Provisiones no técnicas
Derivados de cobertura Pasivos fiscales
Participación dei reaseguro en Ias provisiones técnicas Resto de pasivos
Inmovilizado material e inversiones inmobiliarias Pasivos vinculados con activos mantenidos para la venta.
Inmovilizado intangible TOTAL PASIVO
Participaciones en entidades dcl grupo asociadas. PATRIMONIO NETO
Activos fiscales Fondos propios
Otros activos Ajustes por cambio de valor
Activos mantenidos para Ia venta Subvenciones, donaciones y legados recibidos
TOTAL ACTIVO TOTAL PATRIMONIO NETO
TOTAL PASIVO Y PATRIMONIO NETO

2. Statement of income

The income statement allows us to know the company's profits, the P&L of
insurance companies includes two important parts different from companies
in the real sector: (Premiums earned = Operating Income), (Claims Incurred =
Operating Expenses).

 Earned Premiums : the earned premium corresponds to the portion of

the premium that has already been used to insure, that is, its validity
has already passed and the insurance company has earned that
premium.
  Incurred Claims: is the total amount of claims after deducting the
reinsurance portion and including claims reserves.

Once we have the premium earned and the claims incurred, we include
the other operational income and expenses to obtain the technical profit.

 Other Insurance Products: These are other operational income that is

obtained mainly from the reinsurance part. Example: commissions on
assignments.

 Other reinsurance costs: Correspond to the costs of non-proportional

contracts, recognized interests.

 Other insurance costs: These are the additional operational costs to

the claims that the company incurs in order to comply with its
obligations. Example: Assistance service for the automobile and fire
industry.

 Sales Expenses: Corresponds to the commissions paid to

intermediaries.

When we have all these concepts we arrive at the Technical Utility, taking
into account the following scheme:
 SEGUROS XXXX
AÑO AÑO
(+) Primas emitidas
(-) Primas cedidas
(+-)Mvto. Reserva técnica
(=) Primas Devengadas

(+) Siniestros Pagados

(-) Reembolso de siniestros
(-) Salvamentos y recobros
(+-) Mvto. Reserva de siniestros
(=) Siniestros Incurridos

(+) Otros productos de seguros

(-) Costos reaseguros
(-) Otros costos de seguros
(-) Gasto de Ventas
UTILIDAD TÉCNICA

(+) Producto de Inversiones

(-) Gastos de Administración
UTILIDAD ANTES DE IMPUESTOS
UTILIDAD DEL EJERCICIO

3. Statement of changes in Equity

Its purpose is to present the variations that occur in the equity account
throughout an accounting period. You must disclose:

 Distributions of profits or surpluses declared during the period.

 Regarding dividends, participations or surpluses declared during

the period, indication of the amount payable per contribution, dates
and methods of payment.

 Movement of inappropriate profits.

 Movement of each of the reserves or other accounts included in the

appropriate profits.

 Movement of the premium in the placement of contributions and

valuations.

 Heritage revaluation movement.

 Movement of other accounts that make up the assets.

 Below is a model of a state of changes in the financial situation.

Revalorización Resultado
Capital Reservas Resultado
Concepto del de ejercicio Total
Social Legales del Ejercicio
Patrimonio anterior

Saldo al inicio del periodo

Reclasificación del
resultado del ejercicio a
Aumento de capital
Apropiación reserva legal
Utilidad del ejercicio
Saldo al final del periodo

4. Cash flow statement

Cash is the most important asset a company has, so its proper

management allows us to maintain the operation. You must present a detail
of the cash generated and used in operating, investing and financing
activities.

 Operating activities : They refer to the payments and income

generated from the operation, example: Premiums issued, premiums
assigned, reinsurance costs, etc.
 Investment activities : These include those expenditures or
investments that increase the assets or production capacity of a
company. Example. Property, plant and equipment, investments,
projects.
 Financing activities : They include those resources obtained from third
parties. Example: capitalization of companies.
 To calculate the cash flow, it is necessary to have the Balance Sheet for
the last two periods to determine the variations and the income statement for
the last period. There are two methods to calculate cash flow, the indirect
method and the direct method, where the only difference is found in the
balance sheet variations in operating activities.

MÉTODO INDIRECTO
UTILIDAD DEL EJERCICIO
(+-) Partidas que no implican entrada Depreciaciones, amortizaciones y
→
o salida de efectivo provisiones
(+-) Variaciones del balance Primas por recaudar, cuenta corriente
→
relacionadas con la actividad de reaseguros, cuenta corriente
(+-) Variaciones del balance Compra propiedad, planta y equipo,
→
relacionadas con la actividad de inversiones, venta de vehículos, etc.
(+-) Variaciones del balance
relacionadas con la actividad de → Pago de obligaciones financieras,
financiación pago de dividendos, etc.
(=) SALDO DEL EFECTIVO

MÉTODO DIRECTO
UTILIDAD DEL EJERCICIO
(+-) Partidas que no implican entrada Depreciaciones, amortizaciones y
→
o salida de efectivo provisiones
(+) Recaudo de clientes (pago de
siniestros, pago a reaseguradores,
pago a coaseguros)
(+-) Variaciones del balance Compra propiedad, planta y equipo,
→
relacionadas con la actividad de inversiones, venta de vehículos, etc.
(+-) Variaciones del balance
relacionadas con la actividad de → Pago de obligaciones financieras,
financiación pago de dividendos, etc.
(=) SALDO DEL EFECTIVO
Examples of Accounting Records
Protecta S.A. Compañía de Seguros
Estado de Situación Financiera
Al 31 de Diciembre de 2017
2017 2016 2017 2016
Activo
Activo corriente Pasivo y patrimonio neto
Caja y bancos 9.079,00 7.204,00 Pasivo corriente
Inversiones a valor razonable con cambios en
Obligaciones financieras
resultados 13.238,00 20.776,00 344,00 -
Tributos, participaciones y cuentas por pagar
Inversiones disponibles para la venta 29.437,00 26.800,00 diversas 14.423,00 9.618,00
Cuentas por pagar a asegurados, intermediarios y
Inversiones mantenidas a vencimiento 1.848,00 171,00 auxiliares 3.015,00 2.580,00
Cuentas por cobrar por operaciones de seguros, Cuentas por pagar a reaseguradores y
neto 5.988,00 1.710,00 coaseguradores, neto 183,00 328,00
Cuentas por cobrar a reaseguradores y
Reservas técnicas por siniestros
coasegurado res, neto 60,00 175,00 33.467,00 16.359,00
Activos por reservas técnicas por siniestros a cargo
Total pasivo corriente
de reaseguradores 1,00 86,00 51.432,00 28.885,00
Otras cuentas por cobrar, neto 5.453,00 2.029,00
Impuestos y gastos pagados por anticipado 1.213,00 588,00 Reservas técnicas por primas 733.063,00 604.683,00
Total activo corriente 66.316,00 59.529,00 Total pasivo 784.495,00 633.568,00

Activos por reservas técnicas por primas a cargo de

Patrimonio neto
reaseguradores 492,00 381,00
Impuestos y gastos pagados por anticipado a largo
Capital social
plazo 3.005,00 3.954,00 84.968,00 80.694,00
Inversiones disponibles para la venta 11.419,00 20.419,00 Reserva legal 1.715,00 1.231,00
Inversiones mantenidas a vencimiento, neto 562.082,00 468.464,00 Resultados no realizados 4.665,00 3.274,00
Propiedades de inversión 229.459,00 164.218,00 Resultados acumulados 5.182,00 4.758,00
Inmueble, mobiliario y equipo, neto 6.854,00 5.965,00 Total patrimonio neto 96.530,00 89.957,00
Intangibles, neto 1.398,00 595,00 Total pasivo y patrimonio neto 881.025,00 723.525,00
Total activo 881.025,00 723.525,00 Cuentas de orden 199,00 169,00
Cuentas de Orden 199,00 169,00
 Compañía de Seguros MaxiSafe, S.A.
Balance General
Al 31 de diciembre de 2017

ACTIVOS
Disponibilidades
Caja 1.765.000,00
Bancos 3.264.000,00
Inversiones en valor razonable 35.000,00

Bienes de uso, neto

Edificio 2.500.000,00
Mobiliario y Equipo 1.000.000,00
Vehículo 1.000.000,00
Depreciación acumulada de bienes de uso 900.000,00
TOTAL BIENES DE USO 3.600.000,00

Deudores por prima y otros

Primas por cobrar 6.950.000,00
Instituciones reaseguradoras y Reaflanzadoras
Participación de la reaseguradora en reserva de riesgo en curso 7.000.000,00
Participación de la reaseguradora por siniestros pendientes 7.000.000,00

Otros activos
Gastos anticipados 100.000,00
Gastos de instalación y organización 100.000,00
Inventario de salvamentos por realizar 500.000,00
TOTAL ACTIVOS 30.314.000,00

PASIVOS
Reservas técnicas
Reservas matemáticas 25.000,00
Reserva para siniestros pendientes de liquidación y/o pago 70.000,00
Acreedores contractuales
Primas en depósito 500.000,00
Instituciones reaseguradoras y refianzadoras 12.001.150,00
Primas retenidas por reaseguro cedido 55.000,00
Agentes cuenta comente 46.250,00

Otros pasivos
Otros acreedores diversos 200.000,00
IVA Nominal 255.000,00
TOTAL PASIVOS 13.152.400,00

CAPITAL
Capital social suscrito y pagado 12.305.000,00
Resultados acumulados de ejercicios anteriores 2.000.000,00
Resultados del periodo 2.856.600,00
PASIVO + CAPITAL 30.314.000,00
 Compañía de seguros MaxiSafe, S.A.
Estado de Resultados
Al 31 de diciembre de 2017

CONCEPTO
INGRESOS POR PRIMAS
INGRESOS DE PRIMAS NETAS
Primas seguro directo 2.500.000,00
Primas cedidas del seguro directo 300.000,00
Primas Retenidas 2.200.000,00
COSTO DE SINIESTRALIDAD
Siniestros seguro directo 150.000,00
Gastos de ajuste de siniestros (seguro directo) 6.000,00
Menos.
Salvamentos del seguro y fianza directa 10.000,00
Siniestralidad neta 146.000,00
Menos.
Siniestros recuperado por reasegurado y reafianzamiento cedido 135.000,00
Gastos de ajuste de recuperados por reaseguro y reaflanzamiento cedido 1.350,00
Costo de siniestralidad por Retención 9.650,00
UTILIDAD O (PERDIDA) TECNICA 2.190.350,00
INGRESOS Y GASTOS OPERACIONALES
Liberación de la reserva matemática 475.000,00
Comisión por reaseguro y reaflanzamiento cedidoo 127.500,00
Participación por reaseguro cedido 100.000,00
Derechos de emisión de pólizas 50.000,00
Menos.
Gastos de adquisición y renovación 62.500.250,00
Gastos administrativos 24.000,00
TOTAL INGRESO DE OPERACIÓN NETOS 666.250,00
UTILIDAD O PÉRDIDA 2.856.600,00

The examples show the company's asset organization and its ability to
maintain a constant balance between incoming and outgoing monetary flows
without harming the economic result of management. The financial structure
of insurance and reinsurance companies is very similar to the financial
structure of banks.