1, particularity of insurance products

Compared with physical products, insurance companies sell a commitment contract to compensate and pay for customers' risks, which is an intangible commodity. Hou Xuhua's Accounting for Insurance Companies summarizes the operating characteristics of the insurance industry from many aspects, that is, "for the insurance industry, insurance management is based on the existence of specific risks, on the condition of gathering a large number of risk units, and on the basis of the law of large numbers, and insurance operators actually act as a medium for risk distribution".

2. The profit of the insurance industry is preset.

The income and profit of the insurance industry depends on the actuarial prediction of the actual situation, which is calculated by mathematical logic, and commercial accounting has great presupposition. In traditional industries, profit settlement is the real amount after actually selling goods and receiving payment. However, the product pricing of insurance industry depends on the actuarial estimation of future payout ratio and expense rate. According to the principle of insurance premium rate (that is, insurance pricing and insured price = the sum of possible compensation expenses and various expenses in the future), insurance profit is the deviation between the actual amount and actuarial valuation.

Most of the operating and financial data of the insurance industry are realistic estimates, and the actual number of people in a certain period may not be calculated until all the policies in that period are terminated. For property insurance, a product in which most insurance contracts are concentrated in one year, the financial data of 20x 1 year may not be accurately calculated until 20x2 or 20x3. For life insurance whose product life cycle is more than ten years or even longer, if there is no forecast, this kind of financial data that lags behind for more than ten years is meaningless and necessary.

Second, the insurance accounting elements

Insurance accounting still abides by general accounting standards, and the underlying logic of accounting is consistent with other industries. However, due to business reasons, the characteristics of accounting elements are still different from traditional industries. The following mainly expounds the differences between insurance accounting elements and traditional industry accounting.

1, assets

The investment assets of the insurance industry account for a large proportion. For the manufacturing industry, the main assets are concentrated in physical assets such as production equipment, inventory and raw materials. In the insurance industry, because the main product is intangible credit commitment, the assets are mainly concentrated in the investment assets formed by the retention and appreciation of premiums collected by insurance companies. Therefore, the assets of insurance companies are mainly concentrated in bank deposits, various bonds, listed stocks and other financial assets.

2. Debt

The liability reserves with the largest proportion of liabilities of insurance companies. Understanding the deposit logic of various insurance reserves is the most important part of understanding insurance accounting. Insurance liability reserve is an advance preparation for unknown risks, which is divided into unexpired liability reserve, compensation reserve and general risk reserve. The unearned liability reserve refers to the insurance premium that does not belong to the current period, which is extracted in the form of reserve according to the accrual basis, deducted from the current year's income, listed as expenses in the income statement and listed as liabilities in the balance sheet (see below for accounting treatment). liability for damage