MEASUREMENT OF INSURANCE (TECHNICAL) PROVISIONS IN THE INSURERS’ FINANCIAL STATEMENTS

Abstract

Insurance (technical) provisions in the insurers’ financial statements are measured on the basis of updated
and reliable information and realistic assumptions achieved with the help of specific actuary and statistic methods.
Such measurement is crucial for the key users of these statements – insured persons and insuring parties,
beneficiaries, shareholders, government and supervisory authorities, etc. The public importance and development of
the insurers’ specific business require strictly individual accounting and measurement of its specific items, such as
the insurance (technical) provisions, their analysis and efficient management, and special supervision by the
government insurance supervisory authority. This report is aimed at describing the accounting principles, rules and
good practices for true and fair measurement of allocated and released technical provisions in the insurers’ financial
statements. The object of this study refers to the specific principles, approaches and methods for measurement and
recognition of insurance (technical) provisions and its subject covers the insurers’ abilities to design internal rules
and procedures for measurement of their technical provisions, which are appropriate, complete, and reliable and
which comply with the requirements of the insurance regulatory authority. The fair measurement of insurance
(technical) provisions will contribute to the increase of public trust in insurance as business and in the relevant
insurer, for the purposes of its competitive establishment on the insurance market.