Paper Information

Journal:   SANAAT-E-BIMEH   FALL 2014 , Volume 29 , Number 3 (115); Page(s) 75 To 94.
 
Paper: 

THE EFFECT OF ACCOUNTING STANDARD NO. 28 IMPLEMENTATION AND THE INCREASE OF CLAIMS ON THE INSURANCE COMPANIES' SOLVENCY MARGIN

 
 
Author(s):  JANGI AMIR HOUSHANG, ASADI ASGHAR, MIR AGHAZADEH SEYED OMID*
 
* ISLAMIC AZAD UNIVERSITY, FIROUZKOUH BRANCH
 
Abstract: 

Supervision over the insurance companies has always been a major concern of the governments. In insurance sectors, the payment of the service cost before the service fulfillment (loss payment) is rendered and the ability of liability fulfillment by the insurer are the most important challenges for the insurers. Therefore, the governments are obliged to establish rigid regulations. One of these regulations is the existence of solvency in the insurance companies for the risk exposure, disaster and catastrophic events compensation. There is an obvious conflict between insurance regulation and accounting in Iran. By establishing accounting Standard No. 28 in 1388, the gap between this standard and insurance realities have been arised. In insurance industry, a precise loss evaluation and establishing a sufficient reserve for the risk in an unknown place and time is considered, but in accounting standards, in order to make such a reserve, due to the lack of identification of the beneficiary or accuracy about the amount or time of the claim, complementary technical reserve (natural disasters) is not regarded as a debt. The result of the effects of accounting standard 28, not computing the complementary technical reserve and the increase of debtors on the solvency margin of insurance companies are evaluated in the current study.

 
Keyword(s): SOLVENCY MARGIN, ACCOUNTING STANDARD NO. 28, TECHNICAL EQUALIZATION RESERVE
 
References: 
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