February 17, 2021
Coronavirus pandemic affected businesses across the world and the insurance industry is no exception. For insurers claim requests concerning coronavirus treatments and testing under the various health coverage plans have created financial pandemonium. The financial performance is affected and making it difficult for accountants to report. Painting the actual picture will be a necessary yet difficult task for them.
The pandemic may continue longer leaving the insurance industry in a mess. The unpredictability of the situation is the real worry. The role of an accountant in the insurance industry will be crucial too, after all, it is risk management covering numerous transactions.
The accountant in the insurance industry shoulders lots of responsibilities. Mentioned below are a few.
Managing claims is a complex task involving a lot of calculations and documentation. The accountant plays a crucial role here. He needs to consider corresponding government taxes i.e. not just how much needs to be compensated but also how much needs to be deducted as per government. This task needs accuracy and speed for customer satisfaction.
Maintaining records properly is essential for tax presentation. Since it reflects the financial picture of the business, the financial reports need to be accurate as through them the accountant helps the management analyze strategies and take important decisions. Thus, they assist in planning. Proper records of premiums of each individual help while compensating the claim amount.
The accountant also needs to detect and prevent fraudulent transactions and ensure things are moving as per standards set. Bank reconciliations are a must to ensure the absence of unethical activities. Verification of books of accounts can draw attention to any mismatch or missed entry.
Agents’ Commission and Payroll –
Most insurance companies hire agents to sell their policies. The accountant has to ensure that commissions are properly compensated to them along with the salaries, incentives, and employee benefits of in-house employees. It requires proper monitoring and thus he is responsible for the payroll process.
The accountant shoulders numerous tasks from the evaluation of assets to analyzing investment opportunities. They need to check the growth of the company. Cash flow is very important for the insurance industry and so accounting plays an important role in the insurance industry. Material uncertainties can lead to the doubt incapability of the firm to operate.
Especially in today’s situation when the corona pandemic created a huge impact on the financial reporting process of an insurance company, an accountant is a must to help your business going forward. The accountant will have to consider the existing and anticipated impacts of the pandemic and draw the attention of the management to it.
In case of impairment, the accountants can figure out the recoverable asset. They can estimate the future cash flow. They can help if any change needs in the existing contracts. They also need to keep themselves updated with the government schemes. Support is extended by the government to help those who struggle with poor cash flow in many ways be its tax exemption or low-interest loans, direct subsidies, or rental deferrals. The accountant should be aware of all to be in a position to advise. Also, he needs to understand them as these measures can have a direct impact on financial reporting.
Obviously, the pandemic makes their role more challenging as they need to consider a lot of new things and work under pressure in the new situation. They need to report frequently to give a complete idea of the business condition to the management and investors even under the different working conditions. The increasing number of claim requests make things complicated and preparing financial reports becomes imperative to be aware of the situation and decide if the company needs support.
Accountants in the insurance industry need an understanding of the sector. It requires both time and expertise. You can outsource the accounting services, save your time and leave all worries to your outsourced accountant. If you are looking for an accountant contact us. We are there to support you.