deposit accounting
Deposit accounting is the method of accounting for premium when the policy or reinsurance agreement does not qualify as insurance.
deposit accounting
Deposit accounting is the method of accounting for premium when the policy or reinsurance agreement does not qualify as insurance.
Additional Information
The premium is not recognized as income but as a deposit or contribution to the insurer's surplus. Losses paid are not an expense but rather return of capital. Since premium does not flow through the income statement, the insurer cannot reduce income by the increase in loss reserves.
