The Comparative Research On Life Insurance Reserve Calculation Between Current And Previous Accounting Principles

On January5,2009, China Insurance Regulatory Commission issued the notice of related matters which is about interpretation for Enterprise Accounting Standards No.2. The notice required the annual report of2009prepared by all the insurance company, should be based on current GAAP accounting standards and the reserve should be calculated according to the principle of best estimate. The most important achievement of the New accounting standards is the change of reserve assessing criteria. The new standard adopted "fair value" to assess liabilities of insurance contract, which is very different from the statutory reserves emphasizing on solvency. To find out the differences between the reserves calculating based on dissimilar standards and the impact on the profits of life insurance companies is very important for analyzing the advantages and disadvantages of the new guidelines. It also will help us to refine and improve the new guidelines.Firstly, this thesis introduced the actuarial principles and accounting principles of life insurance reserve, thereby led to the comparison of the accounting method for life insurance. Then by using the20-years term life insurance case, this thesis compared accounting methods and results and discussed optional rules of the new guidelines.In addition, this thesis provides a case of highly-priced rating insurance contract, to illustrate the impact of the criteria switching on the historical burden of Chinese life insurance companies.Finally, according to the calculation results, this thesis argues that the new standards can reflect the fair value of life insurance contract much better, and gives related Suggestions on improving the detailed rules of the new standards.