Flashcards in Introductory Insurance Accounting Deck (22):
Statutory accounting principles (SAP)
The accounting principles and practices that are prescribed or permit- ted by an insurer’s domiciliary state and that insurers must follow.
The valuation of an asset based on financial models instead of market price.
The value of an asset or liability based on its current market price.
An accounting approach in which the focus is to coordinate the timing of income and expense recognition so that both occur when the triggering event that is the focus of the contract occurs.
A current asset representing monies owed to a business by customers for goods or services rendered.
Amounts for losses and loss adjustment expenses owed to an insurer under reinsurance agreements covering paid losses.
Deferred acquisition costs
The recognition of the cost of acquiring a new customer over the duration of an insurance contract.
The amount the insurer estimates and sets aside to pay on an existing claim that has not been settled.
Generally accepted accounting principles (GAAP)
A common set of accounting standards and procedures used in the preparation of financial statements to ensure consistency of presenta- tion and reported results.
The portion of policy premium for the unexpired portion of the policy.
An accounting approach that focuses on the value of assets or liabili- ties that exist as of the balance sheet date.
A loss reserve assigned to an individual claim.
The portion of written premiums that corresponds to coverage that has already been provided.
The total premium on all policies written (put into effect) during a particular period.
The amount a policyholder pays at the beginning of a policy period, pending the determination of the actual premium owed.
A premium that applies to reinsurance contracts or primary policies to reinstate the original policy limit after it has been exhausted by the covered event in order to cover another possible event under the reinsurance or primary policy.
The losses that have occurred during a specific period, no matter when claims resulting from the losses are paid.
Reinsurance purchased to cede future losses.
Loss portfolio transfer
A type of retroactive plan that applies to an entire portfolio of losses.
A reinsurance agreement whereby one reinsurer (the retrocedent) transfers all or part of the reinsurance risk it has assumed or will assume to another reinsurer (the retrocessionaire).
The reinsurer that assumes all or part of the reinsurance risk accepted by another reinsurer.