Study On Acquisition Costs Of Original Insurance Contracts

In the condition that in now days International Insurance Accounting Standards gradually come together, it’s particularly important that actively explore and study the latest developments in insurance accounting standards. IASB and FASB have been working on studying insurance accounting standards, and successfully published "IFRS4" in2004, it means that the first phase of working is completed. In recent years the Phase II studying is undergoing. There is a long and complex process in Insurance Accounting Standards development, which including a lot of aspects:the measured of insurance company’s liabilities and assets, the confirmation of insurance contracts, the separation of insurance contracts and so on. Also it’s very difficult that working out a uniform insurance accounting standards that can suitable for all of countries. In this paper we just talk about the acquisition costs of original insurance contract. The most important part is comparing the current processing modes of the acquisition costs of original insurance contract:the balance sheet method and the deferred ratio method. An insurance contract acquisition cost is one of the most economic costs in the insurance company. The selling insurance contract is insurance company’s main business. The number of commission expenses which insurance company pays to Insurance Agents is very large. The way how to deal with these expenses have a huge impact on the insurance companies’operating conditions. The view of this paper recommends the original insurance contract adopts the deferred ratio method, which have a better benefit for the development of insurance company. The main parts of this paper are the fourth and fifth chapters.The third chapter is foreshadowing section.This paper is divided into five chapters:Chapter one:Introduction. Including the background and significance of research, literature review, research ideas and methods, the organization of this paper, creative and shortcomings.Chapter two:the development of domestic and foreign research. Focuses on introducing the development process of insurance contracts from formally study to the current stage in domestic and foreign.Chapter three:the explanation about the concept of the insurance contract acquisition costs and its latest developments. Including:definition of insurance contract, the scope of insurance contract, the separation of insurance contract, the recognition of insurance contract revenue and definition of insurance contract acquisition costs and make a description about the latest conclusions of the formation. This is for better understanding the concept of insurance contract acquisition costs.Chapter four:the recognition and treatment of the acquisition cost of the insurance contract. At first introducing the balance sheet method and deferred ratio method clearly, and comparing the similarities and differences of these methods. And then introduce what kind of methods is adopted by the more developed regional in insurance industry. At last explaining which method is adopted by China and introduction the impact to China’s insurance industry.Chapter five:the suggestions about how to make sure the treatment of acquisition costs of insurance accounting get better in the condition that International Accounting Standards come together. Combing with the development status and future trends of domestic and foreign insurance accounting, we suggest using the deferred ratio method. This is in line with our country’s interests and the long-term development of the insurance company. Finally, put forward the treatment of acquisition cost.