Insurance companies

Introduction
1. The essence of insurance company
1.1. Concept of insurance company and classification of insurers
1.2. Business legal structures
2. Economic indicators of insurance company’s activity
2.1. Profits of assure
2.2. Expenses of insurance company
Afterword
References

The structure of transaction expenses includes expenses that are general for any other company, and the charges that represent the specificity of insurance activity. The last ones are the expenses of transaction used for realization of insurance operations: broker’s commissions, payment for expert’s services, surveyors, medical institutions, services payment for granting the statistical data.
By designated purpose, or by the contents of insurance operations, the expenses of the insurance companies are subdivided into the expenses connected to preparation, signing and performance of the contract, expenses mediating the transaction of the contract. The expenses connected to preparation and signing of insurance contracts include expenses of development of contract terms, expenses connected with drawing custom (acquisition costs), and also commission expenses, payment for services connected to risk assessment and other preliminary charges. Performance of the contract is provided by formation of reserves and realization payments in case of loss occurrence, including reinsurance charges and investments expenses. Mediation charges can include expenses of management of contracts and administrative expenditures, including a rent, and also other payments and losses. The last ones embrace the sums of the taxes paid by insurers, the loss from disposal of assets of the insurance company and so forth.
The whole expenses of the insurer form the cost price of insurance service. The size of the cost price has essential value at determining financial result from insurance operations and revealing of taxable base. The concept of the cost price of insurance service can be examined from various points of view.
The calculated or estimated value of the cost price is defined at the moment of formation of the price (tariff) for certain kind of insurance. Calculation of the tariff proposes creation of funds for the cover of current and future losses (the last ones include payment for insurance money and creation of reserves); formation of reserves used for financing precautionary actions; and also financing of activity of the insurance company (running a business). All above-mentioned cost items are represented by proper elements in structure of the insurance tariff (the net - premium). However peculiarity of insurance activity, first of all, consists in a relativity of calculations, their approximateness and preliminary nature. That’s why forecasting value of the cost price can differ from the actual cost price of insurance service. The actual cost price depends on results of transition of insurance contracts, upon actual unprofitableness of the insured sum, operation profits of the insurance company, and also economy or the overexpenditure of means for the administrative purposes, including the salary of employees.
Reference of insurer’s expenses to the cost price is regulated not only by general normative documents but also by the decree of the Government of the Russian Federation № 491 ‘About peculiarities of determination of taxable base for payment of the profit tax by insurers’ of 16.05.94. According to it the charges included in the cost price of insurance services rendered by insurers and other charges taken into account at calculation of taxable base for payment of the profit tax include expenses given below:
Assignments to reserves of precautionary actions;
Compensation of the share of insurance payments under the contracts accepted in reinsurance;
Commission fee and commission on profit, paid out under the treaty of reinsurance;
Charges of transaction in terms of expenses on the basis of the decision of the Government of the Russian Federation № 552 of 5.08.92;
Commission fee to agents, compensation of transport expenses;
Payment of outsourced services, including payment of consultation and information services, the auditor conclusions;
Advertising expenditures, training expenses and expenses of continuing education;
Expenses of printing forms;
Expenses of the publication of annual balance and the profit-and-loss report;
Rent expenses of fixed-capital assets;
Other expenses connected with insurance activity.Afterword
The insurance company (assure, insure) is the structure that has economic, legal and organizational detachment and which is carrying out insurance activity within the bounds of the current legislation, namely the signing of insurance contracts, forming of insurance funds, payment for insurance indemnity and benefit payment, investing of free cash flow, etc.
Insurance companies can be created in any of the following business legal structures:
Business partnerships and business companies;
Producers’ cooperatives;
The state and municipal unitary enterprises;
The nonprofit organizations.
Economic indicators of insurance company’s activity are subdivided into incomes and expenses.
Incomes of the insurance company include incomes of insurance activity, of investment activity, other incomes.
Expenses of the insurance company is subdivided into general administrative expenses, commission fees, advertising expenditures, expenses of printing forms, assignments to insurance reserves, expenses of reinsurance, charges of investment activity, insurance indemnities.
References
Federal Law № 51 ‘The Civil Code of the Russian Federation (The First Part)’ of 30.11.1994. Federal Law № 73 as amended of 03.06.2006// http://www.consultant.ru.
Federal Law of the Russian Federation № 4015-1 «About the organization of an insurance activity in the Russian Federation» of 27.11.1992. Federal Law № 90 as amended of 21.07.2005 // http://www.consultant.ru.
Basakov M.I. Insurance industry in questions and answers. – Rostov-on-Don: «Phoenix», 2003.
The fundamentals of insurance activity: Textbook / Executive editor professor. T.A. Fedorova. –: Publishing house BEK, 2004.
Shihov A.K. Insurance. – Moscow: Yuniti – Dana, 2005.
Basakov M.I. Insurance industry in questions and answers. – Rostov-on-Don: «Phoenix», 2003. P. 159.
Federal Law of the Russian Federation № 4015-1 «About the organization of an insurance activity in the Russian Federation» of 27.11.1992. Federal Law № 90 as amended of 21.07.2005 // http://www.consultant.ru.
Federal Law № 51 ‘The Civil Code of the Russian Federation (The First Part)’ of 30.11.1994. Federal Law № 73 as amended of 03.06.2006// http://www.consultant.ru.
The fundamentals of insurance activity: Textbook / Executive editor proffesor. T.A. Fedorova. –: Publishing house BEK, 2004. P. 626.
The decree of the Government of the Russian Federation № 491 ‘About peculiarities of determination of taxable base for payment of the profit tax by insurers’ of 16.05.94.
The decree of the Government of the Russian Federation №552 « About structure of expenses of manufacture and realization of production (works, services), and about the order of formation of the financial results which are taken into account at the taxation of the profit » of 05.08.1992
5
Assistant manager:
producer's liability
Assistant manager:
employer's liability
Manager:
Insurance of transport
Manager:
fire insurance
Manager:
liability insurance
Assistant manager:
Underwriting and claims
Assistant manager:
The insurance of private persons
Assistant manager:
The insurance of companies
Financial Manager
Marketing Manager
General Insurance Manager
Life Assurance Manager
Human Resources Manager
General Manager
Board of Directors