Study On Short - Term Insurance Income Accounting In China

With the restructuring of the capital structure China's insurancecompany and the deepening of the open up, it is more and more importantto determine the profit accurately. The determination of profit is based onthe correct recognition and measurement revenues. Many developedcountries divide insurance policies into long-term one and short-term one,but China does not classify policies like that. Though it is commonlyaccepted that these two categories should be separated, the focus ofresearch is often placed on the revenue of long-term policies. I think any problem should be studied from easy aspect to difficultaspect. To perfect the regulation about revenue recognition andmeasurement of short-term policy will do good to the development ofChina's insurance accounting system. Based on this idea, I started to study the revenue of the short-termpolicies. Through the study on the revenue of short-term policies, I triedto introduce insurance accounting to public, and to suggest somemeaningful proposals about China's short-term policy revenue. The standpoint of this paper is financial accounting, becausefinancial accounting is normal and is the main system to instruct generalaccounting process, and it is suitable to the development of China'sinsurance market. There are two major modes to record short-term policy revenue inthe world, one is deferred and matched mode, the other is asset andliability mode. China adapts a method that is a mixture of these twomodes, but is closer to asset and liability mode. To the contrary, in thispaper, I mainly discussed deferred and matched mode. I suggested thebasic frame of the recognition and measurement of short-term policiesaccording to GAAP revenue theory, and pointed out the problem aboutthe practice of revenue recognition of China's short-term policies. According to this idea, this paper consist of three parts: The first part is the basic theory of the short-term policy revenue. Inthis part, I established the basic environment to discuss the short-termpolicy revenue, introduced the concept of short-term policy revenue, andchose the modes of recognition and measurement of short-term policyrevenue that will be discussed in this paper. I chose the All-inclusiveIncome, Revenue-Expense Approach, and one step report method. In the second part, I discussed the recognition and measurement ofshort-term policy revenue exactly according to the revenue and expensestheory of GAAP accounting. After the discussion, I pointed out that thepremiums are not the revenue on reception, but a liability. Then Ienumerated the expenses items of short-term policy business. In the third part I reflected on issue of the short-term policy revenue.I thought the recognition of revenue have been fairly accurate in theory,but there are still have some contradiction in expression and lack ofharmony among relevant regulations. I suggested that relevant authoritiesshould thoroughly investigate the essence of short-term policy businessfrom a overall perspective, coordinate relevant regulations, and perfectthe recognition and measurement of short-term policy revenue. The main contributions of this paper are: 1. This paper is a multi-discipline one, and discusses the recognitionand measurement of short-term policy revenue thoroughly and roundly. 2. during the discussion about the recognition and measurement ofshort-term policy revenue, I proposed some different idea against thepopular viewpoint. 3. Discussed the limitations of China's relevant regulations andsystems. The main study methods used in this paper are as follows; 1 .discussed both theory and practice 2 discussed both domestic and abroad. I referred to foreignexperiences, and analyzed and discussed the issues based on China'ssituation. 3 discussed both generally and specifically. The insurance industryhas distinct features. In this paper, I considered both the GAAP theoryand the features of insurance industry.