Circular No. 232/2012/TT-BTC dated December 28, 2012 guiding the accounting applicable to non-life insurance companies, reinsurance companies and branches of foreign non-life insurance companies

• Official number: 232/2012/TT-BTC
• Legislation Type: Circular
• Organization: The Ministry of Finance
• Signer: Tran Xuan Ha
• Issued Date: 28/12/2012

MINISTRY OF FINANCE --------	SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom – Happiness ---------------
No. 232/2012/TT-BTC	Hanoi, December 28, 2012

CIRCULAR

GUIDING THE ACCOUNTING APPLICABLE TO NON-LIFE INSURANCE COMPANIES, REINSURANCE COMPANIES AND BRANCHES OF FOREIGN NON-LIFE INSURANCE COMPANIES

Pursuant to the Law on accounting No. 03/2003/QH11 dated June 17, 2003;

Pursuant to the Law on Insurance Business No. 24/2000/QH10 dated December 09, 2000;

Pursuant to the Law on amendments to certain articles of the Law on insurance business No. 61/2010/QH12 dated November 24, 2010;

Pursuant to the Decree No. 129/2004/ND-CP dated May 31, 2004 of the Government stipulating in detail some Articles of the Accounting Law applicable to business operation;

Pursuant to the Decree No. 118/2008/ND-CP dated November 27, 2008 of the Government stipulating the functions, duties, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government’s Decree No. 45/2007/ND-CP dated March 27, 2007 providing guidelines for implementation of a number of articles of Law on Insurance Business;

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At the request of the Department of Audit and Accounting Regulation,

The Minister of Finance provides guidance on the accounting applicable to non-life insurance companies, reinsurance companies and branches of foreign non-life insurance companies.

Article 1. Scope and regulated entities

1. This Circular prescribes a number of accounting accounts, accounting principles, accounting standards and forms of financial statements applicable to non-life insurance companies, reinsurance companies and branches of foreign non-life insurance companies which are established and operating legally in Vietnam (hereinafter referred to as “non-life insurance company").

2. For accounting contents that are not included in this Circular, non-life insurance companies shall comply with the enterprise accounting policy issued together with the Minister of Finance’s Decision No. 15/2006/QD-BTC dated March 20, 2006 (hereinafter referred to as Decision No. 15/2006/QD-BTC); the circulars guiding the implementation of accounting standards and the circulars guiding the amendments of enterprise accounting policy.

Article 2. Regulations on accounts in accounting

1. Names of a number of accounts promulgated in the enterprise accounting policy issued together with Decision No. 15/2006/QD-BTC and the circulars guiding the amendments of enterprise accounting policy are changed for application to non-life insurance companies.

1.1. The names of tier 2 accounts of Account 511 – “Revenues” are changed as follows:

- The name of Account 5111 – “Sales revenue” is changed to “Revenue from primary insurance premiums”;

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- Account 5113 – “Revenue from provision of services” is renamed to “Revenue from ceding commissions”.

1.2. The name of Account 531 – “Sales returns” is changed to “Insurance premiums and commission refund”.

Account 531 has the following tier 2 accounts:

- Account 5311 – Refund of insurance premiums;

- Account 5312 – Refund of reinsurance premiums;

- Account 5313 – Refund of ceding commission.

1.3. The name of Account 532 – “Sales allowance” is changed to “Insurance premiums and commission deduction”.

Account 532 has the following tier 2 accounts:

- Account 5321 – Deduction in primary insurance premiums;

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- Account 5323 – Deduction in ceding commission.

2. The following accounts are added to the charts of accounts compared to the Decision No. 15/2006/QD-BTC and the circulars guiding the amendments of enterprise accounting policy for application to non-life insurance companies.

2.1. Tier 2 accounts of Account 244 – “Revenues” are changed as follows:

- Account 2441 – Guaranty fund;

- Account 2448 – Other deposits.

2.2. The following tier 2 and 3 accounts are added to Account 352 – “Provision for payables”:

- Account 3521 – Unearned premiums reverse

+ Account 35211 – Premium reserve of primary insurance and reinsurance;

+ Account 35212 – Premium reserve of reinsurance ceded.

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+ Account 35221 – Primary insurance and reinsurance indemnity reserve;

+ Account 35222 – Reinsurance ceded indemnity reserve.

- Account 3523 – Catastrophe reserve.

- Account 3524 – Provision for payables.

2.3. Account 416 – “Statutory reserve”.

2.4. Account 533 – “Reinsurance ceded premiums”.

2.5. Account 624 – “Costs of insurance business”.

Account 624 has the following tier 2 and 3 accounts:

- Account 6241 – Costs of primary insurance business:

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+ Account 62412 – Unearned premiums reverse;

+ Account 62413 – Claims reserve;

+ Account 62414 – Costs of commission;

+ Account 62417 – Costs of management of insurance agents;

+ Account 62418 – Other costs of primary insurance business.

- Account 6242 – Costs of reinsurance business:

+ Account 62421 – Costs of indemnity;

+ Account 62422 – Unearned premiums reverse;

+ Account 62423 – Claims reserve;

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+ Account 62428 – Other costs of reinsurance business.

- Account 6243 – Costs of reinsurance ceded.

- Account 6245 – Catastrophe reserve.

- Account 6248 – Other operating costs.

2.6. The following sub-accounts are added to Account 005 – “Insurance contracts not yet incurred liabilities”

Account 005 has the following tier 2 accounts:

+ Account 0051 – Primary insurance contracts not yet incurred liabilities;

+ Account 0052 – Reinsurance contracts not yet incurred liabilities;

+ Account 0053 – Reinsurance ceded contracts not yet incurred liabilities.

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3.1. The following accounts in the balance sheet shall not be applied:

- Account 1385 – Equitization receivables;

- Account 155 – Finished goods;

- Account 1561 – Purchase costs;

- Account 1562 – Incidental purchase costs;

- Account 157 – Goods in transit;

- Account 158 – Goods in bonded warehouse;

- Account 161 – Non-business expenditure;

- Account 2134 – Trademarks;

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- Account 3385 – Equitization payables;

- Account 417 – Enterprise reorganization assistance fund;

- Account 441 – Capital expenditure funds;

- Account 461 – Non-business funds;

- Account 466 – Funds used for fixed asset acquisitions;

- Account 5114 – Revenue from government grants;

- Account 521 – Trade discounts;

- Account 611 – Purchases;

- Account 621 – Direct raw material costs;

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- Account 623 – Costs of construction machinery;

- Account 627 – Factory overheads;

- Account 631 – Production costs;

- Account 641 – selling expenses.

3.2. The following off-balance sheet accounts shall not be applied:

- Account 003 - Goods received on consignment for sale, deposit and collateral;

- Account 008 – Non-business and project expenditure estimate.

(Chart of accounts applicable to non-life insurance companies is in Appendix 01 enclosed together with this Circular).

Article 3. Accounting of financial investments

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2. Financial investments recognized in the accounts specified in Clause 1 this Article shall comply with the following regulations:

2.1. The financial investments of a non-life insurance company shall be carried out in accordance with law provisions and in a manner that ensures the security, efficiency and liquidation;

2.2. Non-life insurance companies shall record the investments in Accounts 12 – Short-term financial investments, Accounts 22 – Long-term financial investments in details and separately according to each owner’s equity, idle capital from operating reverses and other legal sources in accordance with law provisions to act as the basis for making reports on investment activities in accordance with effective regulations of the financial policy;

2.3. Non-life insurance companies shall comply with other regulations in accordance with the enterprise accounting policy issued together with Decision No. 15/2006/QD-BTC and the circulars guiding the amendments of enterprise accounting policy.

3. Accountants shall open special journals to follow long-term and short-term investments (including term deposits at credit institutions, government bonds, corporate bonds, shares, real estate business, establishment or contribution to foreign insurance companies and other investment portfolios).

3.1. Each investment shall be recorded to monitor historical costs, increases and decreases in investments and current value of investments at the end of the accounting period, at the same time monitor in detail each investment fund (owner’s equity, idle capital from operating reverses and other legal sources in accordance with law provisions);

3.2. At the end of the accounting period, non-life insurance companies shall, based on the special journals of investments established according to each form of investment within the period, prepare the reports on investment activities in accordance with the financial policies (e.g. prepare a general table of term deposits (short-term) by each investment fund: owner’s equity, idle capital from operating reverses and other legal sources in accordance with law provisions based on the specials journal of each short-term deposit).

Article 4. Accounting of receivables

Account 131 – “Receivables": Supplementation of contents on recognition of receivables and payments of receivables of non-life insurance companies made by debtors in connection with primary insurance, reinsurance, reinsurance ceded and other insurance businesses (hereinafter referred to as other business operations).

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- Account 131 shall record in detail each debtor according to each receivable and for each business operation such as primary insurance, reinsurance, reinsurance ceded and other business operations to act as the basis for preparing balance sheets and serving management requirements;

- Account 131 shall record in detail the receivables from primary insurance (including receivables from insurance buyers, insurance agents, insurance broker companies and enterprises participating in coinsurance), receivables from reinsurance premiums, from indemnity of reinsurance ceded, from indemnity of enterprises participating in coinsurance and other receivables (receivables from third parties’ reimbursements, retrieval of goods handled and fully compensated, etc.) to ensure adequacy of information in financial statements and serve management requirements of the enterprise;

- Receivables from ceding commissions of reinsurers shall not be recorded to Account 131 – “Receivables”. Accountants of ceding companies shall record these ceding commissions to Dr 331 – “Payables” (Dr 331/Cr 5113) as decreases in reinsurance ceded premiums payable to reinsurers.

Supplementation of structure and content of Account 131 – “Receivables”

Debit:

Receivables from entities in connection with primary insurance, reinsurance, reinsurance ceded and other business operations.

Credit:

Payments made by entities in connection with primary insurance, reinsurance, reinsurance ceded and other business operations.

Debit balance:

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Supplementation of accounting methods for a number of business transactions

1. Receivables from primary insurance of entities such as direct receivables from insurance buyers, enterprises participating in coinsurance, through insurance broker companies or insurance agents shall be recorded as follows:

Dr 131 - Receivables

Cr 511 – Revenues (VAT-exclusive) (5111)

Cr 3331 – VAT (33311) (if any).

2. Collected primary insurance premiums shall be recorded as follows:

Dr 111, 112,...

Cr 131 - Receivables

3. Receivables recorded as decreases in costs of primary insurance such as receivables from third parties’ reimbursements, retrieval of goods handled and fully compensated, etc. shall be recorded as follows:

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Cr 624 – Costs of insurance business (62411)

Cr 3331 – VAT (if any).

4. The amount of receivables collected as decreases in costs of primary insurance shall be recorded as follows:

Dr 111, 112,…

Cr 131 - Receivables

5. Reinsurance premiums receivable of the ceding company in accordance with policies concluded between the reinsurer and the ceding company shall be recorded by the reinsurer as follows:

Dr 131 - Receivables

Cr 511 – Revenues (5112) (Receivables from reinsurance premiums).

As the same time the reinsurer shall determine and record ceding commissions payable to the ceding company as a decrease in receivables from reinsurance premiums as follows:

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Cr 131 – Receivables (Payables from ceding commissions).

6. The collected amount of reinsurance premiums minus (-) the ceding commission paid to the ceding company shall be recorded by the reinsurer as follows:

Dr 111, 112,... (Amounts actually received from ceding companies)

Cr 131 - Receivables

7. Receivables from indemnities of reinsurance ceded, receivables from request for third parties’ reimbursements, cost for handling of fully compensated goods of the reinsurer shall be recorded by the ceding company as follows:

Dr 131 - Receivables

Cr 624 – Costs of insurance business (6241)

8. When the receivables are collected from the reinsurer, the following entries shall be made:

Dr 111, 112,...

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9. Receivables from indemnities of enterprises participating in coinsurance, receivables from costs of request for third parties’ reimbursements, receivables from cost for handling of fully compensated goods of enterprises participating in coinsurance shall be recorded by the leading insurance company as follows:

Dr 624 – Costs of insurance business (62411) (Indemnities and other payables under indemnity liabilities of leading insurance companies)

Dr 131 – Receivables (Indemnities and other receivables under indemnity liabilities of enterprises participating in coinsurance)

Dr 133 – Deductible VAT (if any)

Cr 331 – Payables (Indemnities and other payables in cases of accidents or losses).

10. Collected amounts from enterprises participating in coinsurance shall be recorded by leading insurance companies as follows:

Dr 111, 112,...

Cr 131 - Receivables

11. Receivables from provisions of damage expertise agency, consideration of indemnity settlement, etc. shall be recorded as follows:

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Cr 511 – Revenues (5118)

Cr 333 – Taxes and other payables to state budget (33311) (if any).

12. When the receivables are collected from the policyholder, the following entries shall be made:

Dr 111, 112,...

Cr 131 - Receivables

13. When receivables and payables of the same entity are offset against each other, the following entries shall be made:

Dr 331 – Payables

Cr 131 - Receivables

Article 5. Accounting of short-term prepaid expenses

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Supplementation of accounting principles applicable to this account

- Non-life insurance companies shall monitor in detail insurance commission expenses have arisen but not yet included in the expenses for each primary insurance and reinsurance to serve management requirements.

- All insurance commissions payable to insurance agents, insurance broker companies and ceding companies in accordance with the concluded insurance policies under financial policies shall be recorded in Dr 624 – “Costs of insurance business” (open a sub account for each primary insurance and reinsurance).

- At the end of the accounting period, non-life insurance companies shall determine the insurance commissions not yet included in the expenses of this period corresponding to the unearned insurance premium revenue to transfer them to the following accounting period according to the method of setting aside of premium reserve registered with the Ministry of Finance.

- Periodically, non-life insurance companies shall determine and allocate the insurance commissions to the expenses of current period.

- Non-life insurance companies shall record in detail the actual insurance commission expenses incurred but not yet allocated in the expenses, the amounts of them allocated in the expenses of current period to prepare the notes to financial statement as prescribed.

Supplementation of structure and content of Account 142 – “Short-term prepaid expenses”

Debit:

Insurance commission expenses have arisen but not yet included in the expenses.

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Insurance commission expenses included in the insurance business expenses of current period.

Debit balance:

Insurance commission expenses not yet included in the insurance business expenses of current period.

Supplementation of accounting methods for a number of business transactions

1. Determined insurance commissions payable to insurance broker companies shall be recorded by the primary insurance company as follows:

a. Commissions paid to domestic insurance broker companies eligible for VAT deduction according to the Law on VAT shall be recorded as follows:

Dr 624 – Costs of insurance business (62414, 62424)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331...

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Dr 624 – Costs of insurance business (62414, 62424)

Cr 331 – Payables

When making payment to foreign insurance broker companies, the following entries shall be made:

Dr 331 – Payables

Cr 112 – Cash in banks

Cr 3338 – Other taxes (withholding tax) (if any). 

c. When the non-life insurance company has to pay commissions to the foreign insurance broker company eligible for VAT deduction, the amounts of VAT receivable from the contractor which are deducted according to the laws on VAT shall be recorded as follows:

Dr 624 – Costs of insurance business

Dr 133 – Deductible VAT (if any)

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When making payment to foreign insurance broker companies, the following entries shall be made:

Dr 331 – Payables

Cr 112 – Cash in banks

Cr 3338 – Other taxes (withholding tax) (if any). 

2. Insurance commissions payable to insurance agents shall be recorded as follows:

a. If the insurance agent is an organization:

Dr 624 – Costs of insurance business (62414)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331,...

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- When the non-life insurance company makes instant payments to the insurance agent, the following entry shall be made:

Dr 624 – Costs of insurance business (62414)

Cr 111, 112

Cr 3335 – Personal income tax

- If the non-life insurance company has not yet paid the commissions to the insurance agent, the following entry shall be made:

Dr 624 – Costs of insurance business (62414)

Cr 331 – Payables

When the non-life insurance company makes payments to the insurance agent, the following entry shall be made:

Dr 331 – Payables

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Cr 3335 – Personal income tax

3. Insurance commission payable to ceding companies minus (-) reinsurance premiums receivable in accordance with the concluded policy shall be recorded as follows:

Dr 624 – Costs of insurance business (62424)

Cr 131 - Receivables

4. At the end of the accounting period, the non-life insurance company shall determine and credit the cost of insurance business as an actual insurance commission expenses incurred but have not been included in expenses to determine business results within the period and transfer them to the following period as follows:

Dr 142 - Short-term prepaid expenses

Cr 624 – Costs of insurance business (62414, 62424)

5. Periodically, insurance commission expenses shall be included in the insurance business expenses of current period as follows:

Dr 624 – Costs of insurance business (62414, 62424)

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Article 6. Accounting of cost of primary insurance and reinsurance businesses

Cost of primary insurance and reinsurance business shall be recorded in Account 624 – “Cost of insurance business”.

Accounting principles applicable to this account

1. All costs of insurance business including: insurance commissions, insurance agent commissions, reinsurance commissions and costs related to sale of goods such as: cost of sales staffs, cost of recruitments, training and management of insurance agents, cost of bonuses of agents, cost of renting of offices for sales of insurance or insurance agents, cost of advertisements and marketing, etc. shall be recorded in Dr 624 – “Cost of insurance business”.

2. Cost of insurance exploitation shall not be recorded in Account 642 – “Cost of insurance business”.

3. Cost of insurance exploitation which are specifically determined shall be recorded in Account 624 – “Cost of insurance business”.

4. General management costs not specifically defined for insurance operation and business management shall be recorded to Dr 642 – “Cost of insurance business”. At the end of the accounting period, non-life insurance companies shall allocate the general management costs under characteristics appropriately and consistently. The allocated insurance exploitation costs shall be recorded as Dr 624/ Cr 642, non-life insurance companies shall explain the criteria for allocation of these expenses applied by them in the period stated in the financial statements.

4. Non-life insurance companies shall record in detail the insurance costs in accordance with the contents of costs specified in the financial regulations and each primary insurance and reinsurance operation to ensure adequacy of information in financial statements and serve management requirements of the enterprise.

Article 7. Accounting of guaranty fund

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- The amount of money deposited by the non-life insurance company at a commercial bank in accordance with the Law on Insurance business shall be recognized in Account 2441 – “Guaranty fund”.

Supplementation of structure and content of Account 2441 – “Guaranty fund”

Debit

Amounts of money deposited by the non-life insurance company for long term when starting its insurance business or additionally deposited during its operations.

Credit

- Amounts of money used by the non-life insurance company to fulfill commitments to insurance buyers when the solvency is inadequate;

- Long-term deposits withdrawn by the non-life insurance company upon its end of operation.

Debit balance

Current amount of long-term deposits.

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1. The insurance deposits made by the non-life insurance company upon the company’s start of operation shall be recorded as follows:

Dr 244 – Long-term deposits (2441)

Cr 112 – Cash in banks

2. The amount of deposits withdrawn by the non-life insurance company upon the company’s end of operation shall be recorded as follows:

Dr 112 – Cash in banks

Cr 244 – Long-term deposits (2441).

3. The insurance deposits used by the non-life insurance company to fulfill commitments to insurance buyers when the solvency is inadequate in accordance with financial regulations shall be recorded as follows:

Dr related accounts

Cr 244 – Long-term deposits (2441).

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Accounting of Account 2448 shall comply with those for Account 244 – Long-term deposits prescribed in the enterprise accounting regulations issued together with Decision No. 15/2006/QD-BTC.

Article 8. Accounting of payables

Account 331 – “Payables": Recognizes debts payable and payments of these debts of a non-life insurance company to entities in connection with its primary insurance, reinsurance, reinsurance ceded and other insurance businesses.

Supplementation of accounting principles applicable to this account

- Account 331 shall be recorded in detail to each creditor according to each payable and to each business operation such as primary insurance, reinsurance, reinsurance ceded and other business operations to act as the basis for preparing balance sheets and serving management requirements;

- Account 331 shall record in detail the payables including premiums for reinsurance ceded, payables to enterprises participating in coinsurance, insurance payout, insurance commission payables and other payables to provide sufficient information for preparation of financial statements and serve management requirements of the enterprise;

- Ceding commission payables of ceding companies shall not be recorded to Account 331 – “Payables”. The reinsurer shall record these ceding commission payables to Cr 131 (Dr 624/Cr 131) as a decrease in reinsurance premiums receivable from ceding companies.

Supplementation of structure and content of Account 331 – “Payables”

Debit:

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Credit:

Amounts payable to entities related to primary insurance, reinsurance, cession and other business operations.

Credit balance:

Remaining amounts payable to entities related to primary insurance, reinsurance, cession and other business operations.

Supplementation of accounting methods for a number of business transactions

1. Indemnities payable to the insured due to accidents or losses in accordance with the policy concluded between the non-life insurance company and the customer (the insured) shall be recorded as follows:

Dr 624 – Costs of insurance business (62411)

Dr 133 – Deductible VAT (if any)

Cr 331 – Payables

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Dr 624 – Costs of insurance business (6241) (corresponding tier 3 account)

Dr 133 – Deductible VAT (if any)

Cr 331 – Payables

3. When making advance payments or payments of indemnities or other payments of payable liabilities to providers of services related to primary insurance, the following entries shall be made:

Dr 331 – Payables

Cr 111, 112,....

4. Based on the notice of the ceding company of indemnities and other costs such as costs for request for third parties’ reimbursements, costs for handling of fully compensated goods in proportion to the portion of liabilities of the reinsurance and other related vouchers, the reinsurance company shall record the indemnities for reinsurance and other payables to the ceding company as follows:

Dr 624 – Costs of insurance business (6242)

Cr 331 – Payables

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Dr 624 – Costs of insurance business (6242) (corresponding tier 3 account)

Cr 331 – Payables

6. Advance payments or payments of indemnities and other payments to the ceding company or paying liabilities to providers of services related to reinsurance shall be recorded by the reinsurer as follows:

Dr 331 – Payables

Cr 111, 112,....

7. When making payment of premiums for reinsurance ceded to the reinsurer (including withholding tax) (if any), the following entries shall be made:

Dr 533 – Reinsurance ceded premium

Cr 331- Payables (Premiums for reinsurance ceded payable to reinsurers).

At the same time, insurance commissions receivable from reinsurers shall be recorded as follows:

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Cr 511 – Revenues (5113)

8. When making payment of amounts of premiums for reinsurance ceded minus (-) ceding commission receivable from the reinsurer, the following entry shall be made by the ceding company

Dr 331 – Payables

Cr 111, 112,... (Amounts actually payable to reinsurers)

Cr 3338 – Other taxes (withholding tax) (if any). 

9. The non-life insurance company’s payables to sellers or providers of services related to damage expertise agencies, consideration of indemnity settlement, etc. shall be recorded as follows:

Dr 624 – Costs of insurance business (6248)

Dr 133 – Deductible VAT (1331) (if any)

Cr 331 – Payables

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Dr 624 – Costs of insurance business (6243) (corresponding tier 3 account)

Cr 331 – Payables

11. When making advance payments or payments of paying liabilities to sellers or providers of services related to damage expertise agencies, consideration of indemnity settlement, etc., the following entry shall be made:

Dr 331 – Payables

Cr 111, 112,....

12. When receivables and payables of the same entity are offset against each other, the following entry shall be made:

Dr 331 – Payables

Cr 131 - Receivables

Article 9. Accounting of unearned revenue from ceding commissions

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Supplementation of accounting principles applicable to this account

- The ceding company shall monitor in detail the actual unearned revenue from ceding commissions pending for allocation in cession to serve management requirements.

- All ceding commissions receivable of the reinsurer according to the signed insurance policy under financial regulations shall be recorded in Cr 511 (5113).

- At the end of the accounting period, the ceding company shall determine the unearned revenue from ceding commissions corresponding to the deferred cost of reinsurance premiums to allocate them to following accounting periods according to the method of setting aside of premium reserve registered with the Ministry of Finance.

- Periodically, the ceding company shall determine and record unearned revenues from ceding commissions of the previous period to the revenue from ceding commissions of current period.

- The ceding company shall record in detail the actual insurance commission revenue incurred but not yet allocated in the revenue, the amounts of them allocated in the revenue from cession of the current period to prepare the notes to financial statement as prescribed.

Supplementation of structure and content of Account 3387 – “Unearned revenue”

Debit:

Revenues from ceding commissions included in the revenue from cession of current period.

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Deferred revenue from ceding commissions.

Credit balance:

Revenue from ceding commissions not yet allocated in the revenue from cession.

Supplementation of accounting methods for a number of business transactions

1. Revenue from ceding commissions (when the primary insurance contract and the reinsurance contract cover liabilities) shall be recorded by the reinsurer as follows:

Cr 331 – Payables (Amounts of ceding commissions receivable which are deducted from premium for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenues (5113)

2. At the end of the accounting period, record the deferred ceding commissions as a decrease in revenue as follows:

Dr 511 – Revenues (5113)

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3. Periodically, the accountant shall allocate unearned revenue from ceding commissions of previous period to revenue from commissions of current period as follows:

Dr 3387 – Unearned revenue

Cr 511 – Revenues (5113)

Article 10. Accounting of provision for payables

Current provisions for payables, the contributions to and use of provisions for payables of non-life insurance companies, including technical reserve and provision for payables shall be recorded to Account 352 – “Provisions for payable”

Supplementation of accounting principles applicable to this account

- Technical reserves shall be set aside at the end of the quarterly accounting period and at the end of the annual accounting period when preparing the financial statement. The contributions to technical reserves shall comply with effective accounting regulations

- At the end of the annual (or quarterly) accounting period, the non-life insurance company shall determine the technical reserve to be set aside in the following period:

+ The positive difference between total amount of provisions which must be set aside in this period and unused provisions at the end of the previous period shall be recorded as an increase in provisions and an increase in cost of insurance business (regarding unearned premium reserve and primary insurance and reinsurance indemnity reserve) or a decrease in cost of insurance business (regarding unearned premium reserve and reinsurance ceded indemnity reserve).

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- The non-life insurance company shall not offset the primary insurance and reinsurance indemnity reserve against the reinsurance ceded indemnity reserve. Such reserves must be separately presented on the balance sheet, in which unearned premium reserve, primary insurance and reinsurance indemnity reserve, catastrophe reserve shall be recorded as payables; unearned premium reserve and reinsurance ceded indemnity reserve shall be recorded as reinsurance assets. At the same time, the basic and quantitative explanations of the additional amounts or reversed amounts of these reserves shall be provided if they are identifiable.

Account 352 – “Provision for payables” has 4 tier 2 accounts:

- Account 3521 – “Unearned premiums reverse”;

- Account 3522 – “Claims reserve”;

- Account 3523 – “Catastrophe reserve”;

- Account 3524 – “Provision for payables”.

1. Account 3521 – “Unearned premium reserve”: recognizes the setting aside and reverse of provisions for unearned premiums in accordance with financial regulations.

Account 3521 has 2 tier 3 accounts:

- Account 35211 – “Premium reserve of primary insurance and reinsurance";

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1.1. Account 35211 – “Premium reserve of primary insurance and reinsurance:

This account recognizes the setting aside and reverse of unearned primary insurance premium and reinsurance premium reserve.

This account shall be applied at enterprises providing primary insurance and reinsurance.

Supplementation of structure and content of Account 35211 – “Premium reserve of primary insurance and reinsurance”

Debit:

The value of premium reserve which is reversed for primary insurance and reinsurance which is recorded as a decrease in cost of business operation in the period.

Credit:

The value of the established premium reserve for primary insurance and reinsurance which is recorded in cost of business operation within the period.

Credit balance:

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Supplementation of accounting methods for a number of business transactions

- When setting aside premium reserve for primary insurance and reinsurance for the first time at the end of the annual (or quarterly) accounting period, the following entry shall be made:

Dr 624 – Costs of insurance business

Cr 352 – Provision for payables (35211 - Premium reserve of primary insurance and reinsurance).

- At the end of the following annual (or quarterly) accounting period:

+ The positive difference between the amount of premium reserve for primary insurance and reinsurance which must be set aside in this period and the unused amounts of premium reserve for primary insurance and reinsurance at the end of the previous period shall be recorded to:

Dr 624 – Costs of insurance business (62412, 62422)

Cr 352 – Provision for payables (35211 - Premium reserve for primary insurance and reinsurance).

+ The negative difference between the amount of premium reserve for primary insurance and reinsurance which must be set aside in this period and the unused amounts of premium reserve for primary insurance and reinsurance at the end of the previous period shall be reversed and recorded as follows:

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Cr 624 – Costs of insurance business (62412, 62422).

1.2. Account 35212 – “Reinsurance ceded premium reserve”: Recognizes the contributions to unearned reinsurance ceded premium reserve.

This account shall be applied at ceding enterprises.

Supplementation of structure and content of Account 35212 – “Reinsurance ceded premium reserve”

Debit:

The value of established reinsurance ceded premium reserve which is recorded as a decrease in cost of business operation in the period.

Credit:

The value of reversed reinsurance ceded premium reserve which is recorded as an increase in cost of business operation in the period.

Debit balance:

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Supplementation of accounting methods for a number of business transactions

- When setting aside reinsurance ceded premium reserve for the first time at the end of the annual (or quarterly) accounting period, the following entry shall be made:

Dr 352 – Provision for payables (35212 - Reinsurance ceded premium reserve)

Cr 624 – Costs of insurance business (62412, 62422).

- At the end of the following annual (or quarterly) accounting period:

+ The positive difference between the amount of reinsurance ceded premium reserve which must be set aside in this period and the unused amounts of reinsurance ceded premium reserve at the end of the previous period shall be recorded to:

Dr 352 – Provision for payables (35212 - Reinsurance ceded premium reserve)

Cr 624 – Costs of insurance business (62412, 62422).

+ The negative difference between the amount of reinsurance ceded premium reserve which must be set aside in this period and the unused amounts of reinsurance ceded premium reserve at the end of the previous period shall be reversed as follows:

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Cr 352 – Provision for payables (35212 - Reinsurance ceded premium reserve)

2. Account 3522 – “Claims reserve”: recognizes the setting aside and reverse of provisions for claims reserve in accordance with financial regulations.

Account 3522 has 2 tier 3 accounts:

- Account 35221 – “Primary insurance and reinsurance indemnity reserve”;

- Account 35222 – “Reinsurance ceded indemnity reserve”.

2.1. Account 35221 – “Primary insurance and reinsurance indemnity reserve”: recognizes the setting aside and reverse of primary insurance and reinsurance indemnity reserve.

This account shall be applied at enterprises providing primary insurance and reinsurance.

Supplementation of structure and content of Account 35221 – “Primary insurance and reinsurance indemnity reserve”

Debit:

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Credit:

The value of established primary insurance and reinsurance indemnity reserve which is recorded in cost of business operation in the period.

Credit balance:

Remaining value of primary insurance and reinsurance indemnity reserve at the end of the period.

Supplementation of accounting methods for a number of business transactions

- When setting aside primary insurance and reinsurance indemnity reserve for the first time at the end of the annual (or quarterly) accounting period, the following entry shall be made:

Dr 624 – Costs of insurance business (62413, 62423)

Cr 352 – Provision for payables (35221 - Primary insurance and reinsurance indemnity reserve).

- At the end of the following annual (or quarterly) accounting period:

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Dr 624 – Costs of insurance business (62413, 62423)

Cr 352 – Provision for payables (35221 - Primary insurance and reinsurance indemnity reserve).

+ The negative difference between the amount of primary insurance and reinsurance indemnity reserve which must be set aside in this period and the unused amounts of primary insurance and reinsurance indemnity reserve at the end of the previous period shall be reversed as follows:

Dr 352 – Provision for payables (35221) (Primary insurance and reinsurance indemnity reserve).

Cr 624 – Costs of insurance business (62413, 62423).

2.2. Account 35222 – “Reinsurance ceded indemnity reserve”: Recognizes the setting aside and reverse of the provisions for indemnity for reinsurance ceded.

This account shall be applied at ceding enterprises.

Supplementation of structure and content of Account 35222 – “Reinsurance ceded indemnity reserve”

Debit:

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Credit:

The value of reversed reinsurance ceded indemnity reserve which is recorded as an increase in cost of business operation within the period.

Debit balance:

Remaining value of reinsurance ceded indemnity reserve at the end of the period.

Supplementation of accounting methods for a number of business transactions

- When setting aside reinsurance ceded indemnity reserve for the first time at the end of the annual (or quarterly) accounting period, the following entry shall be made:

Dr 352 – Provision for payables (35222 - Reinsurance ceded indemnity reserve)

Cr 624 – Costs of insurance business (62413, 62423).

- At the end of the following annual (or quarterly) accounting period:

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Dr 352 – Provision for payables (35222 - Reinsurance ceded indemnity reserve)

Cr 624 – Costs of insurance business (62413, 62423).

+ The negative difference between the amount of reinsurance ceded indemnity reserve which must be set aside in this period and the unused amounts of reinsurance ceded indemnity reserve at the end of the previous period shall be reversed as follows:

Dr 624 – Costs of insurance business (62413, 62423)

Cr 352 – Provision for payables (35222 - Reinsurance ceded indemnity reserve)

3. Account 3523 – “Catastrophe reserve”: recognizes the setting aside and use of catastrophe reserve in accordance with financial regulations applicable to non-life insurance companies.

Supplementation of structure and content of Account 3523 – “Catastrophe reserve”

Debit:

The value of used catastrophe reserve recorded as a decrease in cost of business operation in the period.

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The value of catastrophe reserve set aside and recorded in cost of business operation in the period.

Credit balance:

Remaining value of catastrophe reserve at the end of the period.

Supplementation of accounting methods for a number of business transactions

- At the end of the annual accounting period, the catastrophe reserve shall be set aside (first year) based on the retention of the fiscal year according to each line of insurance of the non-life insurance company and  provision rate in accordance with financial regulations as follows:

Dr 624 – Costs of insurance business (6245)

Cr 352 – Provision for payables (3523 - Catastrophe reserve)

- Based on effective financial regulations, payment of primary insurance and reinsurance indemnities using the catastrophe reserve shall be recorded as follows:

Dr 352 – Provision for payables (3523 - Catastrophe reserve)

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- At the end of the annual accounting period, the catastrophe reserve shall be set aside in the following fiscal year based on the retention of the fiscal year according to each line of insurance of the non-life insurance company and provision rate in accordance with financial regulations as follows:

Dr 624 – Costs of insurance business (6245)

Cr 352 – Provision for payables (3523 - Catastrophe reserve)

4. Account 3524 – “Provision for payables”

Accounting of Account 352 shall be implemented similarly to those for Account 352 – “Provision for payables” specified in enterprise accounting regulations issued together with Decision No. 15/2006/QD-BTC dated March 20, 2006 of the Minister of Finance and supplementary documents.

Article 11. Accounting of statutory reserve

Supplementation of Account 416 – “Statutory reserve”: recognizes the current amount, setting aside and use of statutory reserve of non-life insurance companies.

Statutory reserve is set aside from profits after tax.

The setting aside and use of statutory reserve shall comply with financial regulations applicable to non-life insurance companies.

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Debit:

Decrease in the statutory reserve resulted from the non-life insurance company’s use of the statutory reserve in accordance with financial regulations.

Credit:

Increase in the statutory reserve resulted from annual contribution.

Credit balance:

Closing balance of the statutory reserve.

Accounting methods for a number of business transactions

1. The amount of statutory reserve which the non-life insurance company is required to be set aside at the end of the fiscal year shall be recorded as follows:

Dr 421 – Undistributed profit

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2. When using the statutory reserve in accordance with financial regulations, the following entry shall be made:

Dr 416 – Statutory reserve

Cr related accounts.

Article 12. Accounting of revenues

Account 511 – “Revenues": Recognizes revenue from insurance businesses including: primary insurance premium, reinsurance premium, ceding commissions, investment properties and other business operations of a non-life insurance company in an accounting period.

Supplementation of accounting principles applicable to this account

- Revenues from insurance business recorded in Account 511 shall be specific to each type of primary insurance, reinsurance, reinsurance ceded, investment properties and other business operations. Revenues from each type of insurance businesses shall be specific to each line of insurance, each client group and the management requirements;

- Non-life insurance companies shall record the revenue and revenue deductions related to each insurance operation at the time in which they are incurred and in accordance with the contents specified in financial regulations;

- Revenues from primary insurance premium, reinsurance premium and insurance commissions may increase or decrease according to adjustments to insurance policies because policyholders (insurance buyers) make changes in sums assured, scope of insurance coverage or policy period. If the increase in sums assured, scope of insurance coverage or policy period leads to the increase in primary premium, reinsurance premium and ceding commissions, the accountant shall record the increase to Dr 111, 112, 131.../Cr 511; if the decrease in sums assured, scope of insurance coverage or policy period leads to the decrease in primary premium, reinsurance premium and ceding commissions, the accountant shall record the decrease to Dr 511/Cr 111,112,131...

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- Reinsurance ceded premiums which must be transferred to the reinsurer are considered as revenue deductions and separately recorded in Account 533 “Reinsurance ceded premiums” and transferred to Account 511 to calculate net revenue of the ceding company.

- The ceding company and the reinsurer must notify and certify with each other in a timely manner so as to ensure that revenue of ceding commissions receivable and reinsurance ceded premiums (of the ceding company) and revenue of reinsurance premiums and ceding commission payable (of the reinsurer) shall be recorded when obligations are incurred according to the signed insurance policy within the same quarterly accounting period. At the end of the fiscal year, the ceding company and the reinsurer shall certify payables and receivables with each other so as to ensure that revenues and costs shall be recorded as soon as obligations are incurred from the signed insurance policy and financial regulations.

Supplementation of structure and content of Account 511 – “Revenue”

Debit:

- Refunds of primary insurance premium, reinsurance premium and ceding commissions carried forward in the period;

- Reductions of primary insurance premium, reinsurance premium and ceding commissions carried forward in the period;

- Reinsurance ceded premium transferred to the reinsurer in the period;

- Deferred revenue from ceding commissions;

- Net revenue from primary insurance, reinsurance, reinsurance ceded and other business operations carried forward to Account 911 to calculate business results.

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Revenues from insurance business and other business operations in an accounting period.

Account 511 does not have a closing balance.

Account 511 – “Revenues” has 5 tier 2 accounts:

- Account 5111 – “Revenue from primary insurance": Recognizes revenue and net revenue from primary insurance business in the accounting period;

- Account 5112 – “Revenue from reinsurance premiums": Recognizes revenue and net revenue from reinsurance business within the accounting period;

- Account 5113 – “Revenue from reinsurance ceded premiums": Recognizes revenue and net revenue from reinsurance ceded business in the accounting period;

- Account 5117 – “Revenue from investment properties”;

- Account 5118 – “Other revenue”: Recognizes revenue and net revenue of other business operations of insurance business and other receivables if any (sales of excess supplies) other than those recognized in accounts 5111, 5112, 5113, 5117.

Article 13. Accounting of insurance premiums and commission refund

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Accounting principles applicable to this account

- Account 531 shall specifically recognize refunds of insurance premium and insurance commissions according to each type of insurance business such as primary insurance (refund of primary insurance premium), reinsurance (refund of reinsurance premium) and reinsurance ceded (refund of insurance commissions). Each product and line of insurance shall be recorded specifically in each type of insurance business.

- During the period, insurance premium, reinsurance premium and ceding commissions which must be refunded shall be recorded in Dr 531 “Refund of insurance premiums and commissions". At the end of the period, the total amount of refunded insurance premiums and commissions shall be carried forward to the revenue account to determine net revenue of the reporting period.

Structure and content of Account 531 – “Refunds of insurance premium and commission”

Debit:

Insurance premiums and commissions which must be refunded in the period.

Credit:

Total amount of refunded insurance premium and commission in the period carried forward to Account 511 “Revenues” to determine net revenue of the reporting period.

Account 531 does not have a closing balance.

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- Account 5311 – “Refunds of primary insurance premium” recognizes the amount of primary insurance premium refunded in the period;

- Account 5312 – “Refunds of reinsurance premium” recognizes the amount of reinsurance premium refunded in the period;

- Account 5313 – “Refunds of ceding commissions” recognizes the amount of ceding commissions refunded in the period.

Article 14. Accounting of insurance premiums and commission deduction

Account 532 – “Reductions of insurance premiums and commission” recognizes amounts of primary insurance premium, reinsurance premium and insurance commissions that are reduced because the non-life insurance company has to return them to the client (insurance buyer) in cases the insurance policy is expired, the policyholder does not suffer any accidents or losses under the insurance policy concluded between the non-life insurance company and the client or by maintaining long-term relationships between the non-life insurance company and the client and other cases as committed in the policy.

Accounting principles applicable to this account

- Only recognize the reduced amounts of insurance premium and commission after the issuance of invoice to Account 532 after the expired date of the policy, i.e. reductions in the insurance premium and commission are given after the invoice has been issued.

- Reductions in premiums and commissions due to the policyholder’s change in the sums assured, the scope of insurance coverage or the policy period shall not be recorded to account 532.

- Account 532 shall specifically recognize reductions of insurance premium and commissions according to each type of insurance business such as primary insurance (reduction of primary insurance premium), reinsurance (reduction of reinsurance premium), reinsurance ceded (reduction of insurance commissions). Each product and line of insurance shall be recorded specifically in each type of insurance business.

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Structure and content of Account 532 – “Reductions of insurance premium and commission”

Debit:

Primary insurance premium and commission which must be reduced in the period.

Credit:

Total amount of reduced insurance premium and commission in the period carried forward to Account 511 - “Revenues” to determine net revenue of the reporting period.

Account 532 does not have a closing balance.

Account 532 “Reductions of insurance premium and commission” has 3 tier 2 accounts:

- Account 5321 – “Reductions of primary insurance premium” recognizes the amount of primary insurance premium reduced in the period;

- Account 5322 – “Reductions of reinsurance premium” recognizes the amount of reinsurance premium reduced in the period;

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Article 15. Accounting of reinsurance ceded premiums

Account 533 – “Reinsurance ceded premium” recognizes the reinsurance ceded premium in the accounting period of a non-life insurance company.

Accounting principles applicable to this account

- Account 533 shall be applied in non-life insurance companies that engage in cession. Reinsurance ceded premiums are considered as decreases in revenues from insurance business so as to determine net premium revenue;

- Account 533 shall be recognized in details the cessions of primary insurance and reinsurance;

- The non-life insurance company must record both reinsurance ceded premiums payable and ceding commissions receivable from the reinsurer at the same time obligations are incurred according to the signed insurance policy;

- The ceding company and the reinsurer must notify and certify with each other in a timely manner so as to ensure that revenue of ceding commissions receivable and reinsurance ceded premiums (of the ceding company) and revenue of reinsurance premiums and ceding commission payable (of the reinsurer) shall be recorded when obligations are incurred according to the signed insurance policy within the same quarterly accounting period. At the end of the fiscal year, the ceding company and the reinsurer shall certify payables and receivables with each other so as to ensure that revenues and costs shall be recorded as soon as obligations are incurred from the signed insurance policy and financial regulations.

- During the accounting period, the amount of reinsurance ceded premium payable to the reinsurer shall be recorded in Dr 533, at the end of the accounting period, total amounts of the reinsurance ceded premium payable to the reinsurer in the period shall be carried forward to Account 511 – Revenue to determine the net premium revenue in the period;

- Changes in sums assured, scope of insurance coverage or policy period made by the policyholder according to the concluded policy that leads to an increase in the scope of insurance coverage resulted in an increase in the reinsurance ceded premium shall be recorded as Dr 533/Cr 331; a decrease in sums assured, scope of insurance coverage or policy period that leads to a decrease in reinsurance ceded premium shall be recorded as Dr 331/Cr 533.

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Structure and content of Account 533 – “Reinsurance ceded premium”

Debit:

Reinsurance ceded premium payable to the reinsurer in the period.

Credit:

- Reinsurance ceded premium receivable from the reinsurer in cases of refunds or deductions of premium;

- Carried forward sum of premiums for reinsurance ceded which must be paid to the reinsurer in the period to account 511 "Revenue” so as to calculate the net revenue in the period.

Account 533 does not have a closing balance.

Accounting methods for a number of business transactions

1. When the insurance policy has been concluded between the ceding company and the reinsurer but not yet incurred liabilities, the following entry shall be made:

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2. When liabilities arise from the insurance policy and the reinsurance agreement, premiums for reinsurance ceded which must be paid to the reinsurer shall be recorded to:

Dr 533 – Reinsurance ceded premium

Cr 331 – Payables

As the same time Cr 005 – Reinsurance ceded contracts not yet incurred liabilities (0053) shall be recorded.

Concurrently, the accountant shall record the ceding commission receivable from the reinsurer to revenue as follows:

Cr 331 – Payables (Amounts of ceding commissions receivable which are deducted from premiums for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenues (5113)

- When making payment of amounts of premiums for reinsurance ceded minus (-) ceding commission receivable from the reinsurer, the following entry shall be made by the ceding company:

Dr 331 – Payables

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Cr 3338 – Other taxes (withholding tax) (if any). 

3. In case the policyholder makes change in the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy signed with the ceding company resulting in an increase in the premiums for reinsurance ceded which must be paid to the reinsurer, the following entry shall be made:

Dr 533 – Reinsurance ceded premium

Cr 331 – Payables

At the same time, the additional amount of ceding commission receivable from the reinsurer and revenue shall be recorded as follows:

Dr 331 – Payables

Cr 511 – Revenues (5113)

- When making payment of amounts of premiums for reinsurance ceded minus (-) additional ceding commission receivable from the reinsurer, the following entry shall be made by the ceding company:

Dr 331 – Payables

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Cr 3338 – Other taxes (withholding tax) (if any). 

4. In cases the ceding company refunds or reduces insurance premiums or the policyholder decreases the sums assured, scope of insurance coverage or policy period of the insurance policy concluded with the ceding company, the amount of premiums for reinsurance ceded which must be recovered shall be recorded to:

Dr 331 – Payables

Cr 533 – Reinsurance ceded premium

At the same time, a decrease in the ceding commission revenue in proportion to the decrease in premiums for reinsurance ceded shall be recorded as follows:

- If the policyholder decreases the sums assured, scope of insurance coverage or policy period of the insurance policy, the decrease in ceding commission revenue shall be recorded to:

Dr 511 – Revenues (5113)

Cr 331 – Payables

- If the policyholder (insurance buyer) or the non-life insurance company terminates the insurance policy, the decrease in ceding commission revenue shall be recorded to:

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Cr 331 – Payables

- If a reduction in insurance premium is given because no accidents or losses occurred according to the insurance policy, the decrease in ceding commission revenue shall be recorded to:

Dr 532 – Reductions of insurance premium and commission (5323)

Cr 331 – Payables

- When receiving the amounts of reinsurance ceded premiums minus (-) the amount of ceding commissions payable to the reinsurer, the following entry shall be made by the ceding company:

Dr 111, 112,...

Dr 3338 – Other taxes (withholding tax) (if any)

Cr 331 – Payables

5. At the end of the accounting period, the sum of premiums for reinsurance ceded which must be paid to the reinsurer in the period shall be carried forward to account 511 so as to calculate the net revenue in the period as follows:

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Cr 533 – Reinsurance ceded premium

Article 16. Accounting of revenue from insurance businesses

1. Revenue from primary insurance business

1.1. When the insurance policy has been concluded between the non-life insurance company and the policyholder (insurance buyer) but not yet incurred liabilities, the following entry shall be made:

Dr 005 – Insurance contracts not yet incurred liabilities (0051).

1.2. When liabilities arise from the insurance policy, the non-life insurance company shall record the revenue from primary insurance premium as follows:

a. When the insurance policy has been concluded with the policyholder and the policyholder has fully paid premium or when having documents proving that the insurance policy has been concluded and the policyholder has fully paid premium (in case of a new policy) or there is an agreement made with the policyholder on the insurance premium debts, the revenue from primary insurance premium shall be recorded to:

Dr 111, 112 (Total premium paid) (In case the insurance buyer has fully paid the premium)

Dr 131 – Receivables (In case the insurance buyer has an agreement on delay in payment of premium)

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Dr 3331 – VAT (33311) (if any).

As the same time Cr 005 – Insurance contracts not yet incurred liabilities (0051) shall be recorded.

b. When the insurer has come to an agreement on installment payment with the policyholder, the insurance premium receivable of each payment term shall be recorded as revenue as follows:

Dr 111, 112 (Total premium paid) (In case the insurer has received payment of premium from the policyholder)

Dr 131 – Receivables (In case the insurance buyer has not yet received payment of premium from the policyholder)

Cr 511 – Revenues (VAT-exclusive) (5111)

Dr 3331 – VAT (33311) (if any).

As the same time Cr 005 – Insurance contracts not yet incurred liabilities (0051) shall be recorded.

c. When the insurer has come to an agreement on advance payment for multiple periods with the policyholder, the insurance premium receivable from the policyholder in proportion to the insurance premium receivable of current term shall be recorded as revenue and the advances shall be recorded as unearned revenue as follows:

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Cr 511 – Revenues (VAT-exclusive) (The amount of insurance premium received in the period) (5111)

Cr 3387 – Unearned revenues (VAT-exclusive) (The amount of advances received for the following periods)

Dr 3331 – VAT (33311) (VAT payable on the total premiums received) (if any).

As the same time Cr 005- Insurance contracts not yet incurred liabilities (0051) shall be recorded.

- Periodically, the advance of premiums in proportion to the premiums receivable of each period shall be allocated to the revenue from premiums as follows:

Dr 3387 – Unearned revenue (In proportion to the amount of premiums receivable in the period)

Cr 511 – Revenues (5111)

1.3. When the insurance policy has been concluded between the ceding company and the reinsurer but not yet incurred liabilities, the following entry shall be made:

Dr 005- Insurance contracts not yet incurred liabilities (0053).

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Dr 533 – Reinsurance ceded premium

Cr 331 - Payables (Premiums for reinsurance ceded payable to reinsurers).

Concurrently, the ceding commission receivable from the reinsurer shall be recorded as revenue as follows:

Dr 331- Payables (Ceding commission receivable of the reinsurer)

Cr 511 – Revenues (5113)

As the same time Cr 005 – Insurance contracts not yet incurred liabilities (0053) shall be recorded.

- Payment of amounts of premiums for reinsurance ceded minus (-) ceding commission receivables from reinsurers shall be recorded by the ceding company as follows:

Dr 331 – Payables

Cr 3338 – Other taxes (withholding tax) (if any)

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1.5. In case a policyholder (insurance buyer) makes changes in sums assured, scope of insurance coverage or policy period specified in the concluded insurance policy, changes in insurance premiums shall be recorded as follows:

a. The increase in premium revenue resulted from the change in sums assured, the scope of insurance coverage or the policy period shall be recorded to:

Dr 111, 112 (Total premium paid) (In case the insurer has received the additional premium from the policyholder)

Dr 131 – Receivables (In case the insurance buyer has not yet received the additional premium from the policyholder)

Cr 511 – Revenues (VAT-exclusive) (5111)

Dr 3331 – VAT (33311) (if any).

Concurrently, an increase in the premium for reinsurance ceded which must be transferred to the reinsurer (including withholding tax) (if any) shall be recorded to:

Dr 533 – Reinsurance ceded premium

Cr 331- Payables

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Dr 331 – Payables

Cr 511 – Revenues (5113)

- When making payment of amounts of premiums for reinsurance ceded minus (-) the ceding commission receivable from the reinsurer, the following entry shall be made by the ceding company as follows:

Dr 331 – Payables

Cr 111, 112,… (Amounts actually payable to reinsurers)

Cr 3338 – Other taxes (withholding tax) (if any). 

b. The amount refunded to the policyholder that are resulted from the change in sums assured, the scope of insurance coverage or the policy period shall be recorded as an decrease in revenue as follows:

Dr 511 – Revenues (VAT-exclusive) (5111)

Dr 3331 – VAT (33311) (if any).

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Concurrently, a decrease in the premium for reinsurance ceded which must be collected from the reinsurer under terms of the signed reinsurance agreement (including withholding tax) (if any) shall be recorded as follows:

Dr 331 – Payables

Cr 533 – Reinsurance ceded premium

At the same time, the ceding commission payable to the reinsurer shall be recorded as a decrease in revenue as follows:

Dr 511 – Revenues (5113)

Cr 331 – Payables

- When receiving the amounts of reinsurance ceded premiums minus (-) the amount of ceding commissions payable to the reinsurer, the following entry shall be made:

Dr 111, 112,...

Dr 3338 – Other taxes (withholding tax) (if any)

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1.6. If the policyholder or the non-life insurance company terminates the signed insurance policy, the insurance premium refunded to the policyholder shall be recorded as follows:

Dr 531 – Refunds of insurance premium and commission (VAT exclusive)

Dr 3331 – VAT (33311) (if any).

Cr 111, 112 (Total premium paid) (In case the non-life insurance company has refunded the insurance premium to the policyholder)

Cr 131 – Receivables (In case the non-life insurance company has not yet refunded the insurance premium to the policyholder).

Concurrently, the amount of premium for reinsurance ceded which must be collected from the reinsurer due to a refund of premium to the policyholder shall be recorded to:

Dr 331 – Payables

Cr 533 – Reinsurance ceded premium

At the same time, the amount of ceding commission refunded to the reinsurer shall be recorded as follows:

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Cr 331 – Payables

- When receiving the amounts of reinsurance ceded premiums minus (-) the amount of ceding commissions payable to the reinsurer, the following entry shall be made:

Dr 111, 112,...

Dr 3338 – Other taxes (withholding tax) (if any)

Cr 331 – Payables

1.7. When a reduction in insurance premium is made due to the non-occurrence of the policyholder’s damage or loss according to the signed insurance policy between the non-life insurance company and the policyholder, the reduced amount of insurance premium to be paid to the policyholder shall be recorded as follows:

Dr 532 – Reductions of insurance premium and commission (VAT exclusive)

Dr 3331 – VAT (33311) (if any).

Cr 111, 112 (Total premium paid) (In case the non-life insurance company has reduced the insurance premium to the policyholder)

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Concurrently, the amount of premium for reinsurance ceded which must be collected from the reinsurer (if any) due to a reduction of premium given to the policyholder (including withholding tax) (if any) shall be recorded to:

Dr 331 – Payables

Cr 533 – Reinsurance ceded premium

At the same time, the ceding commission payable to the reinsurer shall be recorded as follows:

Dr 532 – Reductions of insurance premium and commission

Cr 331 – Payables

- When receiving the amounts of reinsurance ceded premiums minus (-) the amount of ceding commissions payable to the reinsurer, the following entry shall be made:

Dr 111, 112,...

Dr 3338 – Other taxes (withholding tax) (if any)

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1.8. At the end of the accounting period, premiums for reinsurance ceded in the period shall be transferred to and deducted from the actual primary premium revenue in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenues (5111)

Cr 533 – Reinsurance ceded premium

1.9. At the end of the accounting period, refunded amounts of primary premiums in the period shall be transferred to and deducted from the actual primary premium revenue in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenues (5111)

Cr 531 – Refunds of insurance premium and commission

1.10. At the end of the accounting period, reduced amounts of primary premiums in the period shall be transferred to and deducted from the actual primary premium revenue in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenues (5111)

Cr 532 – Reductions of insurance premium and commission

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Dr 511 – Revenues (5111)

Cr 911 – Income summary

2. Revenue from reinsurance

2.1. When the insurance policy has been concluded between the ceding company and the reinsurer but not yet incurred liabilities, the following entry shall be made:

Dr 005 – Reinsurance agreement not yet incurred liabilities (0052).

2.2. When liabilities arise from the reinsurance agreement, the reinsurer shall record the reinsurance premium which must be collected from the ceding company as follows:

Dr 131 - Receivables

Cr 511 – Revenues (5112) (Amounts of premiums for reinsurance which must be collected from the ceding company).

As the same time Cr 005 – Reinsurance agreement not yet incurred liabilities (0052) shall be recorded.

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Dr 624 – Costs of insurance business (62424)

Cr 131 – Receivables (Amounts of ceding commissions which must be paid to the ceding company and deducted from the amount of reinsurance premium receivable)

- The reinsurer shall record the received amount of reinsurance premium minus (-) the ceding commission paid to the ceding company as follows:

Dr 111, 112 (Amounts actually received from the ceding company)

Cr 131 - Receivables

Cr 3338 - Other taxes (Withholding tax on the ceding commission receivable from the ceding company) (if any)

2.3. In case the policyholder makes change in the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy concluded with the ceding company, changes in primary insurance premium and reinsurance premium shall be recorded as follows:

a. The reinsurance premium which must be collected from the ceding company because of the change in the sums assured, the scope of insurance coverage or the policy period shall be recorded as an increase in revenue as follows:

Dr 131 - Receivables (Additional amount of reinsurance premium which must be collected from the ceding company)

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Concurrently, the ceding commission payable to the ceding company in proportion to the additional amount of reinsurance premium (including withholding tax) (if any) shall be recorded as an increase in costs as follows:

Dr 624 – Costs of insurance business (62424)

Cr 131 - Receivables (Additional amount of ceding commission payable to the ceding company)

-  The reinsurer shall record the additional amount of reinsurance ceded premium receivable minus (-) the ceding commission paid to the ceding company as follows:

Dr 111, 112 (Amounts actually received from the ceding company)

Cr 131 - Receivables

Cr 3338 - Other taxes (Withholding tax on the ceding commission payable to the ceding company) (if any)

b. The amount refunded to the ceding company which is resulted from the change in the sums assured, the scope of insurance coverage or the policy period shall be recorded as a decrease in revenue as follows:

Dr 511 – Revenues (5112)

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Concurrently, the ceding commission receivable from the ceding company in proportion to the decrease in the reinsurance premium (including withholding tax) (if any) shall be recorded as a decrease in costs as follows:

Dr 131 - Receivables (Amount of ceding commission which must be collected from the ceding company)

Cr 624 – Costs of insurance business (62424)

-  The reinsurer shall record the refunded amount of reinsurance premium minus (-) the ceding commission receivable from the ceding company as follows:

Dr 131 - Receivables

Dr 3338 - Other taxes (Withholding tax on the ceding commission receivable from the ceding company) (if any)

Cr 111, 112 (Amounts actually payable to the ceding company)

2.4. In case the ceding company makes change in the sums assured, the scope of insurance coverage or the policy period specified in the reinsurance agreement concluded with the reinsurer, changes in reinsurance premium shall be recorded as follows:

a. The reinsurance premium which must be collected from the ceding company because of the increase in the scope of reinsurance coverage shall be recorded as an increase in revenue as follows:

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Cr 511 – Revenues (5112)

Concurrently, the ceding commission payable to the ceding company in proportion to the additional amount of reinsurance premium (including withholding tax) (if any) shall be recorded as an increase in costs as follows:

Dr 624 – Costs of insurance business (62424)

Cr 131 - Receivables (Additional amount of ceding commission payable to the ceding company)

-  The reinsurer shall record the additional amount of reinsurance ceded premium receivable minus (-) the ceding commission paid to the ceding company as follows:

Dr 111, 112,… (Amounts actually received from the ceding company)

Cr 131 - Receivables

Cr 3338 - Other taxes (Withholding tax on the ceding commission payable to the ceding company) (if any)

b. The amount refunded to the ceding company which is resulted from the change in the scope of reinsurance coverage shall be recorded as a decrease in revenue as follows:

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Cr 131 - Receivables (Amount of reinsurance premium payable to the ceding company)

Concurrently, the ceding commission receivable from the ceding company in proportion to the decrease in the reinsurance premium (including withholding tax) (if any) shall be recorded as a decrease in costs as follows:

Dr 131 - Receivables (Amount of ceding commission which must be collected from the ceding company)

Cr 624 – Costs of insurance business (62424)

- The reinsurer shall record the refunded amount of reinsurance premium minus (-) the ceding commission receivable from the ceding company as follows:

Dr 131 - Receivables

Dr 3338 - Other taxes (Withholding tax on the ceding commission receivable from the ceding company) (if any)

Cr 111, 112,… (Amounts actually payable to the ceding company)

2.5. If the reinsurance premium must be refunded because either the policyholder or the non-life insurance company terminates the signed insurance policy resulting in the termination of the reinsurance agreement, the amount of reinsurance premium refunded to the ceding company shall be recorded as a decrease in revenue as follows:

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Cr 131 - Receivables (Amount of reinsurance premium payable to the ceding company)

Concurrently, the commission receivable from the ceding company in proportion to the amount of reinsurance premium refunded to the ceding company shall be recorded as a decrease in costs as follows:

Dr 131 - Receivables (Amount of ceding commission which must be collected from the ceding company)

Cr 624 – Costs of insurance business (62424)

- The reinsurer shall record the refunded amount of reinsurance premium minus (-) the ceding commission receivable from the ceding company as follows:

Dr 131 - Receivables

Dr 3338 - Other taxes (Withholding tax on the ceding commission receivable from the ceding company) (if any)

Cr 111, 112,… (Amounts actually payable to the ceding company)

2.6. When a reduction in reinsurance premium is made due to the non-occurrence of the policyholder’s damage or loss according to the signed insurance policy between the non-life insurance company and the policyholder resulting in the reduction of reinsurance premium and ceding commission, the reduced amount of insurance premium to be paid to the policyholder shall be recorded as a decrease in revenue as follows:

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Cr 131 - Receivables (Amount of reinsurance premium payable to the ceding company)

Concurrently, the commission receivable from the ceding company in proportion to the reduced amount of reinsurance premium payable to the ceding company shall be recorded as a decrease in costs as follows:

Dr 131 - Receivables (Amount of ceding commission which must be collected from the ceding company)

Cr 624 – Costs of insurance business (62424)

- The reinsurer shall record the payment of reinsurance premium minus (-) the ceding commission receivable from the ceding company as follows:

Dr 131 - Receivables

Dr 3338 - Other taxes (Withholding tax on the ceding commission receivable from the ceding company) (if any)

Cr 111, 112,… (Amount of reinsurance premium actually paid to the ceding company)

2.7. At the end of the accounting period, refunded amount of reinsurance premium in the period shall be transferred to and deducted from the actual reinsurance premium revenue in the period so as to determine the net revenue, and recorded to:

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Cr 531 – Refunds of insurance premium and commission

2.8. At the end of the accounting period, reduced amount of reinsurance premium in the period shall be transferred to and deducted from the actual reinsurance premium revenue in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenues (5112)

Cr 532 – Reductions of insurance premium and commission

2.9. At the end of the accounting period, the net revenue shall be carried forward to Account 911 – Income summary as follows:

Dr 511 – Revenues (5112)

Cr 911 – Income summary

3. Revenue from reinsurance ceded

3.1. When the insurance policy has been concluded between the ceding company and the reinsurer but not yet incurred liabilities, the following entry shall be made:

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3.2. When liabilities incurred from the insurance policy and the reinsurance agreement, the ceding company shall record the ceding commission receivable from the reinsurer under terms of the reinsurance agreement to the revenue as follows:

Cr 331 – Payables (Amounts of ceding commissions receivable which are deducted from premiums for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenues (5113)

As the same time Cr 005 – Reinsurance ceded contracts not yet incurred liabilities (0053) shall be recorded.

Concurrently, the ceding company shall record the premiums for reinsurance ceded payable to the reinsurer (including withholding tax) (if any) as follows:

Dr 533 – Reinsurance ceded premium

Cr 331 - Payables (Premiums for reinsurance ceded payable to reinsurers).

3.3. When making payment of amounts of premiums for reinsurance ceded minus (-) ceding commission receivable from the reinsurer, the following entry shall be made by the ceding company:

Dr 331 – Payables

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Cr 3338 – Other taxes (withholding tax) (if any). 

3.4. In case the policyholder makes change in the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy concluded with the non-life insurance company, changes in primary insurance premium and reinsurance ceded premium shall be recorded as follows:

a. If the change in the sums assured, the scope of insurance coverage or the policy period results in an increase in the premium for reinsurance ceded, accountant of the ceding company shall record the additional amount of ceding commission receivable from the reinsurer in proportion to the additional amount of premium for reinsurance ceded payable to the reinsurer as an increase in revenue as follows:

Dr 331 – Payables (Additional amount of ceding commissions receivable which are deducted from premium for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenues (5113)

Concurrently, an increase in the premium for reinsurance ceded which must be transferred to the reinsurer under terms of the signed insurance policy (including withholding tax) (if any) shall be recorded to:

Dr 533 – Reinsurance ceded premium

Cr 331 - Payables (Additional amount of premium for reinsurance ceded payable to the reinsurer).

- When making payment of amounts of premiums for reinsurance ceded minus (-) ceding commission receivable from the reinsurer, the following entry shall be made by the ceding company:

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Cr 111, 112,… (Amount actually payable to reinsurers)

Cr 3338 – Other taxes (withholding tax) (if any). 

b. If the change in the sums assured, the scope of insurance coverage or the policy period results in a decrease in the premium for reinsurance ceded, accountant of the ceding company shall record the amount of ceding commission to be refunded to the reinsurer in proportion to the amount of premium for reinsurance ceded recovered from the reinsurer as a decrease in revenue as follows:

Dr 511 – Revenues (5113)

Cr 331 – Payables (Amounts of ceding commissions payable which are deducted from premiums for reinsurance ceded payable to the reinsurer)

Concurrently, a decrease in the premium for reinsurance ceded which must be collected from the reinsurer under terms of the signed reinsurance agreement (including withholding tax) (if any) shall be recorded as follows:

Dr 331 – Payables

Cr 533 – Reinsurance ceded premium

- When receiving the amounts of reinsurance ceded premiums minus (-) the amount of ceding commissions payable to the reinsurer, the following entry shall be made by the ceding company:

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Dr 3338 – Other taxes (withholding tax) (if any)

Cr 331 – Payables

3.5. In case the ceding company makes change in the sums assured, the scope of insurance coverage or the policy period specified in the reinsurance agreement concluded with the reinsurer, changes in reinsurance ceded premium shall be recorded as follows:

a. If the change in the scope of insurance coverage results in an increase in the premium for reinsurance ceded, the accountant shall record the additional amount of ceding commission receivable from the reinsurer in proportion to the additional amount of premium for reinsurance ceded payable to the reinsurer as an increase in revenue as follows:

Dr 331 – Payables (Additional amount of ceding commission receivable which is deducted from premiums for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenues (5113)

Concurrently, an increase in the premium for reinsurance ceded which must be transferred to the reinsurer under terms of the signed insurance policy (including withholding tax) (if any) shall be recorded to:

Dr 533 – Reinsurance ceded premium

Cr 331 - Payables (Additional amount of premium for reinsurance ceded payable to the reinsurer).

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Dr 331 – Payables

Cr 111, 112,… (Amount actually payable to reinsurers)

Cr 3338 – Other taxes (withholding tax) (if any). 

b. If the change in the scope of insurance coverage results in a decrease in the premium for reinsurance ceded, the accountant shall record the amount of ceding commission payable to the reinsurer in proportion to the decrease in premium for reinsurance ceded receivable from the reinsurer as a decrease in revenue as follows:

Dr 511 – Revenues (5113)

Cr 331 – Payables (Amounts of ceding commissions payable which are deducted from premiums for reinsurance ceded payable to the reinsurer)

Concurrently, a decrease in the premium for reinsurance ceded which must be collected from the reinsurer under terms of the signed reinsurance agreement (including withholding tax) (if any) shall be recorded as follows:

Dr 331 – Payables

Cr 533 – Reinsurance ceded premium

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Dr 111, 112,… (Amounts actually received from the reinsurer)

Dr 3338 – Other taxes (withholding tax) (if any)

Cr 331 – Payables

3.6. When the policyholder or the non-life insurance company terminates the signed insurance policy resulting in refund of insurance premium, reinsurance ceded premium and ceding commission, accountant of the ceding company shall record the ceding commission which must be refunded to the reinsurer because of the refund of reinsurance ceded premium as a decrease in revenue as follows:

Dr 531 – Refunds of insurance premium and commission

Cr 331 – Payables (Amounts of ceding commission which must be refunded to the reinsurer and deducted from the premium for reinsurance ceded receivable from the reinsurer)

Concurrently, the amount of premium for reinsurance ceded receivable from the reinsurer (including withholding tax) (if any) shall be recorded to:

Dr 331 – Payables

Cr 533 – Reinsurance ceded premium

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Dr 111, 112,… (Amounts actually collected from the reinsurer)

Dr 3338 – Other taxes (withholding tax) (if any)

Cr 331 – Payables

3.7. When a reduction in reinsurance premium is made due to the non-occurrence of the policyholder’s damage or loss according to the signed insurance policy resulting in the reduction of reinsurance premium and ceding commission, accountant shall record the premium for reinsurance ceded (if any) receivable from the reinsurer (including withholding tax, if any) to:

Dr 331 - Payables (The reduced amount of premiums for reinsurance ceded receivable from the reinsurer)

Cr 533 – Reinsurance ceded premium

At the same time, the ceding commission which must be refunded to the reinsurer shall be recorded as follows:

Dr 532 – Reductions of insurance premium and commission

Cr 331 – Payables (The amount of ceding commission which must be refunded to the reinsurer and deducted from the premium for reinsurance ceded receivable from the reinsurer)

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Dr 111, 112,… (Amounts actually collected from the reinsurer)

Dr 3338 – Other taxes (withholding tax) (if any)

Cr 331 – Payables

3.8. At the end of the accounting period, record the deferred ceding commissions as a decrease in revenue as follows:

Dr 511 – Revenues (5113)

Cr 3387 – Unearned revenue (The deferred ceding commissions actually incurred)

3.9. Periodically, accountants shall allocate unearned revenue from ceding commissions of previous period to revenue from commissions of current period as follows:

Dr 3387 – Unearned revenue (In proportion to the amount of ceding commission receivable in the period)

Cr 511 – Revenues (5113)

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Dr 511 – Revenues (5113)

Cr 533 – Reinsurance ceded premium

3.11. At the end of the accounting period, the ceding commission refunded in the period shall be transferred to and deducted from the revenue as the ceding commission actually earned in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenues (5113)

Cr 531 – Refunds of insurance premium and commission

3.12. At the end of the accounting period, the ceding commission reduced in the period shall be transferred to and deducted from the revenue as the ceding commission actually earned in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenues (5113)

Cr 532 – Reductions of insurance premium and commission

3.13. At the end of the accounting period, the net revenue shall be carried forward to Account 911 – Income summary as follows:

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Cr 911 – Income summary

Article 17. Accounting of costs of insurance business

Supplementation of Account 624 – “Costs of insurance business”: Recognizes costs of insurance business and other operating costs of insurance business incurred by a non-life insurance company.

Costs of insurance business include all actual costs incurred during the provision of insurance services such as: cost of product design, establishment and introduction, cost of damage assessment, inspection and collection of information related to insurance event, payment of insurance payouts, technical reserves, cost for request of third parties’ reimbursements, cost for handling of fully compensated goods, cost for evaluation of the insured’s risks, cost directly related to insurance (including insurance commissions, costs related to insurance sale, cost of management of insurance agencies such as recruitment, training and incentives for agencies, etc.) and other costs such as contributions to the Fund for protection of the insured and other funds in accordance with the financial regulations.

This account shall also be recognized other operating costs incurred during the provision of insurance services such as costs of damage assessment, claim review services, request of third parties’ reimbursements, etc.

Accounting principles applicable to this account

- Account 624 – “costs of insurance business and others” shall be only recognized the actual costs incurred (regardless of payment made or not) during the provision of insurance services in the accounting period; amounts receivable recorded as decreases in costs incurred in the period such as indemnities collected from reinsurers, collection of third parties’ reimbursements, retrieval of goods handled and fully compensated, insurance commissions pending for allocation and reversed amounts of technical reserves.

- Costs of insurance business recognized on account 624 must be specific to primary insurance business, reinsurance business, reinsurance ceded and other operations. Costs of every insurance operation of a certain insurance business type shall be specifically recorded to this account in accordance with financial regulations and management requirements of the company.

- The ceding company and the reinsurer must notify and certify with each other in a timely manner so as to ensure that indemnities and other costs such as request for third parties’ reimbursements, cost for handling of fully compensated goods; collection of reinsurance claim payments and other receivables such as collection of third parties’ reimbursements, retrieval of goods handled and fully compensated, ceding commissions shall be recorded when obligations are incurred according to the signed insurance policy within the same quarterly accounting period. At the end of the fiscal year, ceding companies and reinsurers shall certify payables and receivables with each other so as to ensure that revenues and costs shall be recorded as soon as obligations are incurred from the signed insurance policy and financial regulations.

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- Other operating costs include costs of other business operations such as costs in progress of provision of damage assessment, claim review services, request of third parties’ reimbursements, etc. made by insurance agencies (if any) shall be transferred to account 154 – “Work in progress”. Costs of services sold during a period shall be transferred to account 911 – “Income summary” to determine the company’s business result.

- Account 624 – “Costs of insurance business” shall not be used to recognize general administration costs, financial costs and other costs.

Structure and content of Account 624 – “Costs of insurance business”

Debit:

- Costs that arise in the period of insurance business (including primary insurance business, reinsurance business, reinsurance ceded and other business operation);

- Carriedforward cost of other business operations in progress at the beginning of the period.

Credit:

- Amounts recorded as decreases in costs of insurance business and other business operations incurred within the period (such as indemnities paid by reinsurers, collection of third parties’ reimbursements, retrieval of goods handled and fully compensated, insurance commissions pending for allocation, reversed amounts of technical reserves, etc.)

- Amounts of indemnities of primary insurance and reinsurance paid from the catastrophe reserve;

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- Costs of other business operations in progress at the end of the period carriedforwarded to account 154 – “Work in progress”.

- Actual costs of services of other business operations sold during the period shall be carriedforwarded to account 911 – Income summary.

Account 624 does not have a closing balance.

Account 624 – “Costs of insurance business” has 5 tier 2 accounts:

- Account 6241 - "Costs of primary insurance business”: recognizes all costs of primary insurance business incurred in the period, including: payment of indemnities, payment of commissions and other costs related to the setting aside of technical reserves, payment of damage assessment, cost of inspection and collection of information, cost for handling of fully compensated goods, cost of request for third parties’ reimbursements, cost for evaluation of the insured’s risks, cost of prevention and reduction of losses and other costs related to primary insurance business.

This account has 6 tier 3 accounts:

Account 62411- Costs of indemnity;

Account 62412- Unearned premiums reverse;

Account 62413- Claims reserve;

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Account 62417- Costs of management of insurance agents;

Account 62418- Other costs of primary insurance business.

A non-life insurance company may open more tier 3 or 4 accounts to record costs of primary insurance business other than those recognized on accounts 62411, 62412, 62413, 62414, 62417 and 62418 in accordance with applicable financial regulations and its management requirements.

- Account 6242 – “Costs of reinsurance business” recognizes all costs of reinsurance assumed in the period, including payment of indemnities, setting aside of technical reserves, payment of commissions, cost for handling of fully compensated goods, cost of request for third parties’ reimbursements, cost for evaluation of the insured’s risks and other costs of reinsurance business

This account has 5 tier 3 accounts:

Account 62421- Cost of indemnity;

Account 62422- Unearned premiums reverse;

Account 62423- Claims reserve;

Account 62424- Costs of commission;

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A non-life insurance company may open more tier 3 or 4 accounts to record costs of  reinsurance business other than those recognized on accounts 62421, 62422, 62423, 62424 and 62428 in accordance with applicable financial regulations and its management requirements.

- Account 6243 – “Cost of reinsurance ceded": Recognizes costs of reinsurance ceded.

- Account 6245 – “Catastrophe reserve”: recognizes the cost of setting aside of catastrophe reserve of the non-life insurance company.

- Account 6248 – “Other operating costs”: Recognizes expenses related to insurance business and other business operations other than those recognized in accounts 6241, 6242, 6243 and 6245.

Accounting methods for a number of business transactions

1. Costs of primary insurance business:

1.1. When costs in connection with damage assessment, inspection and collection of information related to insurance event incurred, the following entry shall be made:

Dr 624 – Costs of insurance business (62411)

Dr 133 – Deductible VAT (if any)

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1.2. When the non-life insurance company has determined the amount of insurance payout to the insured due to the occurrence of damage or loss according to the primary insurance policy, based on related vouchers, the amount of insurance payout shall be recorded as follows:

Dr 624 – Costs of insurance business (62411)

Dr 133 – Deductible VAT (if any)

Cr 331 – Payables (If the company has not yet paid the insurance payout to the insured)

Cr 111,112,… (If the company has paid the amount of insurance payout to the insured)

When amounts of indemnities receivable in proportion to the portion of risks taken on by the reinsurer arise, the following entry shall be made:

Dr 131 - Receivables

Cr 624 – Costs of insurance business (62411)

1.3. When making payment of the amount of insurance payout to the insured, the following entry shall be made:

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Cr 111, 112, etc.

1.4. When costs of primary insurance business which are paid by the insurance company then recovered from the reinsurer as agreed upon in the reinsurance agreement such as cost of assessment, cost of handling of fully compensated goods, cost of request for third parties’ reimbursements and other costs arise, the following entry shall be made:

Dr 624 – Costs of insurance business (62411)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331,…...

When decreases of costs of primary insurance business such as cost of assessment, cost of handling of fully compensated goods, etc. and receivables of the reinsurer in proportion to the portion of risks it taken on arise, the following entry shall be made:

Dr 131 - Receivables

Cr 624 – Costs of insurance business (62411)

1.5. When the amount of collection of third parties’ reimbursements is determined truthfully, based on related vouchers, the accountant shall record them as a decrease in cost of insurance business as follows:

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Cr 624 – Costs of insurance business (Total amount of collection of third parties’ reimbursements) (62411)

When amounts of collection of third parties’ reimbursements payable to the reinsurer in proportion to the portion of risks it taken on arise, the following entry shall be made:

Dr 624 – Costs of insurance business (62411)

Cr 331 - Payables (The amount payable to the reinsurer from the collection of third parties’ reimbursements).

1.6. When recovering fully compensated goods, the non-life insurance company shall monitor in detail all kinds of recovered goods on the books of accounts until they are sold or liquidated. When the amount of fully compensated goods recovered is determined, the accountant shall record them as a decrease in costs of insurance business as follows:

Dr 131 - Receivables

Cr 624 – Costs of insurance business (62411)

Cr 3331 – VAT (if any).

At the same time, the amount of fully compensated goods receivable shall be recorded as payables to the reinsurer as follows:

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Cr 331 – Payables (The amount payable to the insurer from the amount of fully compensated goods recovered) (3311).

1.7. When costs of evaluation of the insured’s risks, costs of prevention and reduction of losses, etc. arise, the following entry shall be made:

Dr 624 – Costs of insurance business (62418)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331,…

1.8. When purchasing assets and equipment for the insured to prevent and reduce losses, the following entry shall be made:

Dr 624 – Costs of insurance business (62418)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331,… (In case of purchasing assets and equipment immediately for the insured)

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1.9. When calculating and contributing to the Fund for protection of the insured based on total premiums from primary insurance contracts in accordance with effective financial regulations, the following entry shall be made:

Dr 624 – Costs of insurance business (62418)

Cr 111, 112,....

1.10. When calculating and contributing to the Fund for fire prevention and control, the Fund for motor vehicle insurance, the following entry shall be made:

Dr 624 – Costs of insurance business (62418)

Cr 111, 112,....

1.11. Accounting of costs of insurance exploitation:

a. When payables related to commissions for the brokerage enterprise in accordance with the contract concluded between the insurance company and the insurance brokerage in accordance with effective financial regulations:

- Commissions paid to domestic insurance broker companies eligible for VAT deduction according to the Law on VAT shall be recorded as follows:

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Dr 133 – Deductible VAT (if any)

Cr 112, 331,…

- Commissions paid to domestic insurance broker companies not eligible for VAT deduction according to the Law on VAT shall be recorded as follows:

Dr 624 – Costs of insurance business

Cr 331 – Payables

When making payment to foreign insurance broker companies, the following entry shall be made:

Dr 331 – Payables

Cr 112 – Cash in banks

Cr 3338 – Other taxes (withholding tax) (if any). 

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Dr 624 – Costs of insurance business

Dr 133 – Deductible VAT (if any)

Cr 331 – Payables

When making payment to the foreign insurance broker company, the following entry shall be made:

Dr 331 – Payables

Cr 112 – Cash in banks

Cr 3338 – Other taxes (withholding tax) (if any). 

b. When commissions payable to insurance agents in accordance with effective financial regulations are determined, the following entries shall be made:

- If the insurance agent is an organization:

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Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331,…

- If the insurance agent is an individual:

+ When the non-life insurance company makes instant payments to the insurance agent, the following entry shall be made:

Dr 624 – Costs of insurance business (62414)

Cr 111, 112,....

Cr 3335 – Personal income tax

+ If the non-life insurance company has not yet paid the commissions to the insurance agent, the following entry shall be made:

Dr 624 – Costs of insurance business (62414)

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When the non-life insurance company makes payments to the insurance agent, the following entry shall be made:

Dr 331 – Payables

Cr 111, 112,....

Cr 3335 – Personal income tax

c. When costs of management of insurance agents such as recruitment, initial training, certification exams, advanced training and aid for agents, etc. arise, the following entry shall be made:

Dr 624 – Costs of insurance business (62417)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331,…

d. Costs of incentives for insurance agents shall be recorded as follows:

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Cr 111, 112, etc.

Cr 3335 – Personal income tax (if the insurance agent is an individual).

D. Salaries, wages, allowances and other payables to staffs of the sales department shall be recorded as follows:

Dr 624 – Costs of insurance business

Cr 334 – Payables

- Social insurances, health insurances, union fees and unemployment insurances of staffs of the sales department shall be recorded as follows:

Dr 334 – Payables (The amount deducted from salaries)

Dr 624 – Costs of insurance business (The amount included in costs)

Cr 338 – Other payables

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Dr 624 – Costs of insurance business (According to management requirements)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331...

f. Depreciation of fixed assets for sale of insurance or insurance agents shall be recorded as follows:

Dr 624 – Costs of insurance business

Cr 214 – Depreciation of fixed assets.

1.12. General management costs not specifically defined for insurance operation and business management shall be recorded as follows:

Dr 642 – General administration expenses

Dr 133 – Deductible VAT (if any)

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1.13. At the end of the accounting period, the non-life insurance company shall determine and allocate the costs of insurance exploitation to the costs of insurance business as follows:

Dr 624 – Costs of insurance business

Cr 642 – General administration expenses

1.14. At the end of the annual (or quarterly) accounting period, based on the claims reserve of primary insurance policies which must be set aside in accordance with effective financial regulations, the following entry shall be made:

- The positive difference between the amount of claims reserve which must be set aside in this period and the unused amounts of claims reserve at the end of the previous period shall be recorded to:

Dr 624 – Costs of insurance business (62413)

Cr 352 – Provision (35221 – Primary insurance and reinsurance indemnity reserve) (Primary insurance indemnity reserve).

- The negative difference between the amount of claims reserve which must be set aside in this period and the unused amounts of claims reserve at the end of the previous period shall be reversed and recorded to:

Dr 352 – Provision (35221- Primary insurance and reinsurance indemnity reserve) (Primary insurance indemnity reserve).

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1.15. At the end of the annual (or quarterly) accounting period, based on the claims reserve of the reinsurance agreement which must be set aside in accordance with effective financial regulations, the following entry shall be made:

- The positive difference between the amount of reinsurance ceded indemnity reserve which must be set aside in this period and the unused amounts of reinsurance ceded indemnity reserve of the previous period shall be recorded to:

Dr 352 – Provision for payables (35222 - Reinsurance ceded indemnity reserve)

Cr 624 – Costs of insurance business (62413)

- The negative difference between the amount of reinsurance ceded indemnity reserve which must be set aside in this period and the unused amounts of reinsurance ceded indemnity reserve at the end of the previous period shall be reversed and recorded to:

Dr 624 – Costs of insurance business (62413)

Cr 352 – Provision for payables (35222 - Reinsurance ceded indemnity reserve)

1.16. At the end of the annual (or quarterly) accounting period, based on the unearned premium reserve of the primary insurance policy which must be set aside in accordance with effective financial regulations, the following entry shall be made:

- The positive difference between the amount of unearned premium reserve which must be set aside in this period and the unearned premium reserve at the end of the previous period shall be recorded to:

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Cr 352 – Provision for payables (35211- Premium reserve of primary insurance and reinsurance) (Primary insurance premiums)

- The negative difference between the amount of unearned premium reserve which must be set aside in this period and the unearned premium reserve at the end of the previous period shall be reversed and recorded to:

Dr 352 – Provision for payables (35211- Premium reserve of primary insurance and reinsurance) (Primary insurance premiums)

Cr 624 – Costs of insurance business (62412)

1.17. At the end of the annual (or quarterly) accounting period, based on the unearned premium reserve of the reinsurance agreement which must be set aside in accordance with effective financial regulations, the following entry shall be made:

- The positive difference between the amount of reinsurance ceded premium reserve which must be set aside in this period and the unused amounts of reinsurance ceded premium reserve at the end of the previous period shall be recorded to:

Dr 352 – Provision for payables (35212- Reinsurance ceded premium reserve)

Cr 624 – Costs of insurance business (62412)

- The negative difference between the amount of reinsurance ceded premium reserve which must be set aside in this period and the unused amounts of reinsurance ceded premium reserve at the end of the previous period shall be reversed and recorded to:

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Cr 352 – Provision for payables (35212- Reinsurance ceded premium reserve)

1.18. At the end of the accounting period, the non-life insurance company shall determine and credit the costs of insurance commissions so as to transfer them to the following period as follows:

Dr 142 - Short-term prepaid expenses

Cr 624 – Costs of insurance business (62414)

1.19. Periodically, non-life insurance companies shall determine and allocate the insurance commissions to the expenses of current period as follows:

Dr 624 – Costs of insurance business (62414)

Cr 142 - Short-term prepaid expenses

1.20. At the end of the accounting period, costs of primary insurance business in the period shall be recorded as follows:

Dr 911 – Income summary

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2. Costs of reinsurance business

2.1. Based on notices of the ceding company on indemnities which are in proportion to the portion of liabilities of the reinsurance and other related vouchers, the accountant shall record indemnities for reinsurance and others payables to the ceding company as follows:

Dr 624 – Costs of insurance business (62421)

Cr 331 – Payables

2.2. When making payment of the amount of insurance payout to the ceding company, the following entry shall be made:

Dr 331 – Payables

Cr 111, 112,…

2.3. When receiving notices of the ceding company on payables such as cost of request for third parties’ reimbursements, costs for handling of goods fully compensated and other payables (if any), based on related vouchers, the following entry shall be made:

Dr 624 – Costs of insurance business (6242)

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...

2.4. When costs of evaluation of the insured’s risks, costs of prevention and reduction of losses, etc. of the reinsurer arise, the following entry shall be made:

Dr 624 – Costs of insurance business (62428)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 331,…

2.5. Based on notices of the ceding company, receivables from third parties’ reimbursements, retrieval of goods handled and fully compensated of the ceding company as follows:

Dr 131 - Receivables

Cr 624 – Costs of insurance business (6242)

When collecting receivables from the ceding company, the following entry shall be made:

Dr 111, 112

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2.6. Accounting of costs of insurance exploitation:

2.6.1. Insurance commission payable to the ceding company minus (-) reinsurance premiums receivable in accordance with the concluded policy shall be recorded by the reinsurer as follows:

Dr 624 – Costs of insurance business (62424)

Cr 131 - Receivables

2.6.2. Accounting of other costs related to insurance exploitation incurred at the non-life insurance company shall be implemented similarly to those at the primary insurance company as specified in part 1 of this Article.

2.7. At the end of the annual (or quarterly) accounting period, based on the claims reserve of reinsurance agreements which must be set aside in accordance with effective financial regulations, the following entry shall be made:

- The positive difference between the amount of claims reserve which must be set aside in this period and the unused amounts of claims reserve at the end of the previous period shall be recorded to:

Dr 624 – Costs of insurance business (62423)

Cr 352 – Provision (35221 - Primary insurance and reinsurance indemnity reserve) (Primary insurance indemnity reserve).

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Dr 352 – Provision (35221 - Primary insurance and reinsurance indemnity reserve) (Primary insurance indemnity reserve)

Cr 624 – Costs of insurance business (62423)

2.8. At the end of the annual (or quarterly) accounting period, based on the unearned premium reserve of the reinsurance agreement which must be set aside in accordance with effective financial regulations, the following entry shall be made:

- The positive difference between the amount of reinsurance premium reserve which must be set aside in this period and the unused amounts of reinsurance premium reserve at the end of the previous period shall be recorded to:

Dr 624 – Costs of insurance business (62422)

Cr 352 – Provision (35211 - Premium reserve of primary insurance and reinsurance) (Primary insurance premiums)

- The negative difference between the amount of reinsurance premium reserve which must be set aside in this period and the unused amounts of reinsurance premium reserve at the end of the previous period shall be reversed and recorded to:

Dr 352 – Provision for payables (35211- Premium reserve of primary insurance and reinsurance) (Primary insurance premiums)

Cr 624 – Costs of insurance business (62422)

...

...

...

Dr 142 - Short-term prepaid expenses

Cr 624 – Costs of insurance business (62424)

2.10. Periodically, insurance commission expenses shall be included in the insurance business expenses of current period as follows:

Dr 624 – Costs of insurance business (62424)

Cr 142 - Short-term prepaid expenses

2.11. At the end of the accounting period, costs of reinsurance business in the period shall be recorded as follows:

Dr 911 – Income summary

Cr 624 – Costs of insurance business (6242)

3. Costs of reinsurance ceded

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...

...

Dr 624 – Costs of insurance business (6243)

Cr 111, 112, 141, 331...

3.2. At the end of the accounting period, costs of reinsurance ceded in the period shall be recorded as follows:

Dr 911 – Income summary

Cr 624 – Costs of insurance business (6243)

4. Catastrophe reserve

4.1. At the end of the accounting period, based on the amount of catastrophe reserve which must be set aside in accordance with effective financial regulations, the following entry shall be made:

Dr 624 – Costs of insurance business (6245)

Cr 352 – Provision (3523- Catastrophe reserve)

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...

Dr 352 – Provision (3523 - Catastrophe reserve)

Cr 624 – Costs of insurance business (6245)

5. Other operating costs

5.1. At the beginning of the accounting period, other operating costs of insurance business and operating work in progress (if any) shall be carriedforwarded to Dr 624 “Costs of insurance business” as follows:

Dr 624 – Costs of insurance business (6248)

Cr 154 – Work in progress.

5.2. Other insurance business costs such as costs of damage assessment, consideration of indemnity settlement, request for third parties’ reimbursements, etc. and other operating costs shall be recorded as follows:

Dr 624 – Costs of insurance business (6248)

Dr 133 – Deductible VAT (if any)

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5.3. At the end of the accounting period, other operating costs of insurance business and operating work in progress (if any) shall be carriedforwarded to Dr 154 “Work in progress” as follows:

Dr 154 – Work in progress

Cr 624 – Costs of insurance business (6248)

5.4. At the end of the accounting period, costs of services sold during a period shall be carriedforwarded as follows:

Dr 911 – Income summary

Cr 624 – Costs of insurance business (6248)

Article 18. Tax accounting

1. Deductible input VAT

1.1. When making payment of insurance commission of insurance businesses subject to VAT to the domestic insurance brokerage company or the insurance agent which is an organization, based on the VAT invoice of the domestic insurance brokerage company or the insurance agent and related vouchers, the amount of deductible input VAT shall be recorded as follows:

...

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Dr 133 – Deductible VAT (1331) (if any)

Cr 111, 112, 331...

1.2. Based on VAT invoices in accordance with the Law on VAT and other related vouchers, the amount of insurance payout of insurance businesses which are subject to VAT shall be recorded as follows:

Dr 624 – Costs of insurance business (62411)

Dr 133 – Deductible VAT (1331)

Cr 331 – Payables (If the company has not yet paid insurance payout to the insured)

Cr 111,112,… (If the company has paid the amount of insurance payout to the insured)

1.3. Based on VAT invoices in accordance with the Law on VAT and other related vouchers, if costs related to insurance businesses which are subject to VAT are eligible for input VAT deduction, the following entry shall be made:

Dr 624 – Costs of insurance business (62411)

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...

Cr 111, 112, 331...

1.4. Based on VAT invoices of the supplier and other related vouchers, if assets and equipment purchased to prevent and reduce losses of the insured which are related to insurance businesses subject to VAT are eligible for input VAT deduction, the following entry shall be made:

Dr 624 - Costs of insurance business (62418) (In case of purchasing assets and equipment immediately for the insured)

Dr 152 – Raw materials (In case of warehousing assets and equipment)

Dr 133 – Deductible VAT (1331)

Cr 111, 112, 331,…

1.5. If the non-life insurance company spends cash on capital expenditure or purchase or major repair of fixed assets which are concurrently used in insurance businesses that are subject to and not subject to VAT or used for employees of the company such as: mid-shift rest houses, houses for employees, etc., the input VAT shall be totally deducted and the following entry shall be made:

Dr 211, 213 (In case of purchase of fixed assets)

Dr 241 – Construction in progress (In case of capital expenditure works or major repairs of fixed assets)

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...

Cr 111, 112, 331,…

1.6. In case of purchase of goods and services which are concurrently use in insurance businesses and other operations subject to and not subject to VAT:

Technically, the non-life insurance company shall recognize separately the deductible input VAT. The amount of non-deductible input VAT shall be recognized separately to materials, goods and services purchased on a case-by-case basis:

When purchasing materials, goods and services which are concurrently use in insurance businesses and other operations subject to and not subject to VAT but the deductible input VAT are not recognized separately, the following entry shall be made:

Dr 152, 153, 624, 642,… (VAT exclusive)

Dr 133 – Deductible VAT

Cr 111, 112, 331,…

1.7. At the end of the accounting period, the amount of deducted input VAT in proportion to the portion of revenues of services that are subject to VAT on total revenue arising in the period in accordance with the Law on VAT shall be calculated and recorded as follows:

Dr 3331 – VAT (33311)

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...

1.8. The amount of non-deductible input VAT shall also be recorded as follows:

Dr 624, 642

Dr 142, 242 (In case the non-deductible VAT amount is in large value and needs to be gradually amortized to following accounting periods)

Cr 133 – Deductible VAT

2. Output VAT

2.1. When revenue from insurance businesses and other services which are subject to VAT arise, based on VAT invoices in accordance with the Law on VAT and other related vouchers, the amount of output VAT payable shall be recorded as follows:

Dr 111, 112, 131,… (Total amount paid)

Cr 511 – Revenues (VAT-exclusive)

Cr 3331 – VAT (33311)

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Dr 131 - Receivables

Cr 624 – Costs of insurance business (62411)

Cr 3331 – VAT (if any).

3. Personal income tax

3.1. When the non-life insurance company makes instant payment of commissions payable to insurance agents, the following entry shall be made:

Dr 624 – Costs of insurance business (62414)

Cr 111, 112,…

Cr 3335 – Personal income tax

3.2. If the non-life insurance company has not yet paid the commissions to the insurance agent who is an individual, the following entry shall be made:

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Cr 331 – Payables

When the non-life insurance company makes payments to the insurance agent, the following entry shall be made:

Dr 331 – Payables

Cr 111, 112,…

Cr 3335 – Personal income tax

3.3. Costs of incentives for the insurance agent who is an individual shall be recorded as follows:

Dr 624 – Costs of insurance business (62417)

Cr 111, 112, etc.

Cr 3335 – Personal income tax

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4.1. When liabilities arise from the reinsurance agreement, based on a certified document on payment of reinsurance under the reinsurance agreement concluded, premiums for reinsurance ceded which must be paid to the reinsurer shall be recorded to:

Dr 533 – Reinsurance ceded premium

Cr 331 – Payables

- Payment of amounts of premiums for reinsurance ceded minus (-) ceding commission receivables from the reinsurer shall be recorded by the ceding company as follows:

Dr 331 – Payables

Cr 111, 112,.... (Actual amounts payable to reinsurers)

Cr 3338 – Other taxes (withholding tax) (if any). 

4.2. When insurance commissions payable to the broker company under the agreement concluded between the non-life insurance company and the foreign insurance brokerage company who not eligible for VAT deduction in accordance with the Law on VAT arise, the amount of withholding tax payable shall be recorded as follows:

Dr 624 – Costs of insurance business

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...

...

When making payment to the foreign insurance broker company, the following entry shall be made:

Dr 331 – Payables

Cr 112 – Cash in banks

Cr 3338 – Other taxes (withholding tax) (if any). 

- When the non-life insurance company has to pay commissions to the foreign insurance broker company eligible for VAT deduction, the amounts of VAT receivable from the contractor which are deducted according to the laws on VAT shall be recorded as follows:

Dr 624 – Costs of insurance business

Dr 133 – Deductible VAT (if any)

Cr 331 – Payables

When making payment to the foreign insurance broker company, the following entry shall be made:

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...

Cr 112 – Cash in banks

Cr 3338 – Other taxes (withholding tax) (if any). 

4.3. When costs related to insurance business, general administration or construction works, major repairs of fixed assets, etc. payable to the seller, the supplier or the foreign contractor arise, the amount of withholding tax payable shall be recorded as follows:

Dr 241, 624, 642

Cr 111, 112, 331,…

Cr 3338 – Other taxes (withholding tax) (if any). 

Article 19. Accounting of coinsurance business

In case of coinsurance business in non-life insurance companies, the companies participating in coinsurance shall authorize one non-life insurance company (referred to as leading insurer) to sign the insurance policy with the policyholder, collect all insurance premium (VAT included), pay indemnities and other costs, then pay insurance premiums in proportion to the amount of risk taken by other companies participating in coinsurance and collect the amount of indemnities and other costs in proportion to the amount of risk taken by other companies participating in coinsurance under the signed coinsurance agreement.

 Accounting principles applicable to coinsurance business

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- When determining the amount of insurance premiums payable to the companies participating in coinsurance, the leading insurer shall recognize them to Cr 331 “Trade payables” (Specific amount of payable to each company participating in coinsurance).

- When determining the amount of indemnities and other costs receivable from the companies participating in coinsurance, the leading insurer shall recognize them to Dr 131 “Trade receivables” (Specific amount of receivable from each company participating in coinsurance).

- Declaration of deducted input and output VAT of coinsurance business shall be recognized in related accounts in accordance with the Law on VAT.

- The leading reinsurer and companies participating in coinsurance must notify and certify with each other in a timely manner so as to ensure that revenues and costs shall be recorded by all companies participating in coinsurance when obligations are incurred according to the signed insurance policy within the same quarterly accounting period. At the end of the fiscal year, the leading reinsurer and companies participating in coinsurance shall carry out certification and inspection so as to ensure that revenues and costs shall be recorded as soon as obligations are incurred from the signed insurance policy.

Accounting methods for a number of business transactions

1. Accounting of revenue from insurance premium

1.1. When the insurance policy has been signed by the leading insurer and the policyholder (the insurance buyer) but not yet incurred liabilities, the leading insurer and companies participating in coinsurance shall record the following entry:

Dr 005 – Insurance policies not yet incurred liabilities (0051).

1.2. When liabilities incur from the insurance policy signed by the leading insurer and the policyholder (the insurance buyer), the leading insurer shall recognize the amount of revenue from insurance premium receivable and the amount of insurance premiums payable to companies participating in coinsurance in proportion to the portion of premiums stated in the signed coinsurance agreement as follows:

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...

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Cr 511 – Revenues (5111) (The amount of insurance premium receivable of the leading insurer)

Cr 331 – Trade payables (Each company participating in coinsurance) (amounts of payable to companies participating in coinsurance).

Cr 3331 – output VAT (if any).

Cr 005 – Insurance contracts not yet incurred liabilities (0051) shall also be recorded.

1.3. When liabilities incur from the insurance policy signed by the leading insurer and the companies participating in coinsurance, based on vouchers related to the insurance premiums receivable and VAT (if any), the companies participating in coinsurer shall recognize the amount of insurance premiums receivable from the leading insurer as follows:

Dr 131 – Receivables (The leading insurer)

Cr 511 – Revenues (5111)

Cr 005 – Insurance contracts not yet incurred liabilities (0051) shall also be recorded.

2. Accounting of indemnities and other costs

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...

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Dr 624 – Costs of insurance business (62411) (Indemnities and other payables under indemnity liabilities of the leading insurer)

Dr 131 – Receivables (Indemnities and other payables under indemnity liabilities of enterprises participating in coinsurance)

Dr 133 – Deductible VAT (if any)

Cr 331 – Payables (Indemnities and other payables in cases of accidents or losses).

2.2. When receiving a notice from the leading insurer on the amount of indemnities and other payable, based on the notice and other related vouchers, the following entry shall be recorded by the companies participating in the coinsurance:

Dr 624 – Costs of insurance business (62411) (Indemnities and other payables under indemnity liabilities of companies participating in coinsurance)

Cr 331 – Trade payables (The leading insurer)

Cr 111, 112,....

Article 20. Accounting of insurance contracts not yet incurred liabilities

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The above account shall be used to recognize revenues from the primary insurance policy, reinsurance and reinsurance ceded agreements which has been concluded by the non-life insurance company and the policyholder but not yet incurred liabilities:

Account 005 shall be recognized in detail the insurance policy which incurred liabilities but not yet reached the premium paying term in accordance with effective financial regulations.

Structure and content of Account 005 – “Insurance contracts not yet incurred liabilities”

Debit

Revenue from insurance policies not yet incurred liabilities

Credit

Revenue from insurance policies that have incurred liabilities

Debit balance:

Revenue from current insurance policies not yet incurred liabilities of the non-life insurance company.

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- Account 0051 – “Primary insurance policy not yet incurred liabilities”: Revenue from primary insurance policies not yet incurred liabilities;

- Account 0052 – “Reinsurance agreement not yet incurred liabilities”: Revenue from reinsurance agreements not yet incurred liabilities;

- Account 0053 - “Reinsurance ceded contract not yet incurred liabilities”: Revenue from reinsurance ceded contracts not yet incurred liabilities.

Accounting methods for a number of business transactions

1. When the primary insurance policy has been concluded by the non-life insurance company and the policyholder or the reinsurance agreement has been concluded but not yet incurred liabilities, the following entry shall be made:

Dr 005 – Insurance policies not yet incurred liabilities (0051, 0053).

2. When liabilities have arisen from the primary insurance policy, the reinsurance agreement or the reinsurance ceded contract, apart from crediting to Account 005, the primary insurance company, the reinsurer and the ceding company shall record entries to the balance sheet to recognize the transactions as indicated in Article 15, Article 16 and Article 19 of this Circular.

Article 21. Annual financial statement and interim financial statement system

1. Annual financial statement

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- Balance sheet                                           Form B 01 - DNPNT

- Income statement                                     Form B 02 - DNPNT

- Cash flow statement                                  Form B 03 - DNPNT

- Notes to financial statement                    Form B 09 - DNPNT

2. Interim financial statement

A non-life insurance company is required to prepare the following interim financial statements:

- Interim balance sheet (complete statement): Form B 01a - DNPNT

- Interim income statement (complete statement): Form B 02a - DNPNT

- Interim cash flow statement (complete statement): Form B 03a - DNPNT

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Article 22. Forms of financial statement applied to non-life insurance companies

1. Forms of annual financial statement (Stated in Annex 02 enclosed herewith)

2. Forms of interim financial statement (Stated in Annex 02 enclosed herewith)

Forms of interim financial statements (complete statements) applied to non-life insurance companies are the same as those specified in Decision No. 15/2006/QD-BTC dated March 20, 2006. An interim financial statement (complete statement) shall include all items as those of an annual financial statement of same kind as mentioned herein.

Article 23. Contents and preparation of financial statement

1. Contents and preparation of balance sheet (Form B 01 – DNPNT) (Stated in Annex 02).

This Circular provides guidelines for contents and preparation of specific indicators associated with operations of non-life insurance companies. Non-life insurance companies shall specify other indicators (items) in financial statement in accordance with effective corporate accounting regulations (corporate accounting regulations issued together with the Ministry of Finance’s Decision No. 15/2006/QD-BTC dated March 20, 2006 and the Circulars guiding the amendment and supplementation of the corporate accounting regulations).

Trade receivables (131)

This indicator reflects receivables related to primary insurance business, reinsurance business and reinsurance ceded and other receivables due within one year at the reporting time. This indicator shall recognize total debit balance of account 131 “Trade receivables” opened with each customer, detailing short-term receivables from customers.

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Receivables related to insurance policies (Code 131.1)

This indicator reflects receivables related to primary insurance business, reinsurance business and reinsurance ceded and other receivables due within one year at the reporting time. Detailed debit balance of account 131 “Trade receivables” shall be recorded to “Receivables related to insurance policies”.

Other trade receivables (131.2)

This indicator recognizes receivables from other related entities at the reporting time. This indicator shall recognize the detailed debit balance of account 131 “Trade receivables”, detailing other short-term receivables from customers.

Short-term prepaid expenses (151)

This indicator recognizes deferred expenses from insurance commissions and other short-term prepaid expenses at the reporting time. This indicator shall recognize the detailed debit balance of account 142 “Short-term prepaid expenses”.

Code 151 = Code 151.1 + Code 151.2

Deferred expenses from insurance commissions (151.1)

This indicator recognizes actual insurance commission expenses have arisen but not yet included in the expenses of insurance business of the reporting period. This indicator shall recognize the detailed debit balance of account 142 “Short-term prepaid expenses”, detailing deferred expenses from insurance commissions.

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This indicator recognizes amounts of payment made for some expenses but not yet included in the expenses of insurance business at the end of the accounting period of the reporting year. This indicator shall recognize the detailed debit balance of account 142 “Short-term prepaid expenses” minus (-) the amount of deferred expenses from insurance commissions recognized in code 151.1.

Reinsurance assets (Code 190)

This indicator recognizes amounts of reinsurance ceded premium reserve and reinsurance ceded indemnity reserve at the reporting time. This indicator shall recognize the debit balance of account 35212 “Reinsurance ceded premium reserve” and account 35222 “Reinsurance ceded indemnity reserve”.

Code 190 = Code 191 + Code 192

Other long-term receivables (218)

This indicator recognizes compulsory insurance deposits of the life insurer and other long-term receivables from relevant debtors at the reporting time. This indicator shall recognize total debit balance of account 138 “Other receivables”, account 244 “Long-term deposits” and account 338 “Other payables” and its sub accounts, detailing long-term receivables.

Code 218 = Code 218.1 + Code 218.2

Insurance deposits (Code 218.1)

This indicator recognizes long-term insurance deposits of the non-life insurance company at the reporting time. Debit balance of account 2441 - “Insurance deposits” shall be recorded to this indicator.

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This indicator recognizes receivables from other debtors classified as long-term assets and long-term advance payments to sellers (if any).

This indicator equals (=) the total debit balance of account 138 “Other receivables”, account 338 “Other payables” and account 244 “Long-term deposits” minus (-) sum of insurance deposits recognized in code 218.1

Trade payables (312)

This indicator reflects amounts payable to creditors related to primary insurance business, reinsurance business and reinsurance ceded and other payables that are due within one year or within a course of business at the reporting time. This indicator shall recognize total credit balance account 331 “Trade payables” which are specified as short-term and opened with each customer, detailing short-term payables to sellers.

Code 312 = Code 312.1 + Code 312.2

Payables related to insurance policies (Code 312.1)

This indicator reflects payables related to primary insurance business, reinsurance business and reinsurance ceded and other business operations that are due within one year or within a course of business at the reporting time. Detailed credit balance of account 331 “Trade payables” shall be recorded to “Payables related to insurance policies”.

Other trade payables (312.2)

This indicator reflects other amounts payable to sellers at the reporting time. This indicator shall recognize the credit balance of sub accounts of account 331 “Trade payables”, detailing short-term payables to sellers.

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This indicator reflects unearned revenues from insurance commissions which have not yet been recorded as revenues in the period at the reporting time. This indicator shall recognize the credit balance of account 3387 “Unearned revenues” (unearned revenue from insurance commissions).

Provision for short-term payables (320)

This indicator recognizes provision for short-term payables at the reporting time. This indicator shall recognize the credit balance of account 3524 “Provision for payables” (sub accounts: provisions for short-term payables).

Technical reserves (329)

This indicator reflects unused technical reserves at the reporting time.

Code 329 = Code 329.1 + Code 329.2 + Code 329.3

Premium reserve of primary insurance and reinsurance (329.1):

This indicator recognizes amounts of unearned premium reserve of primary insurance and reinsurance at the reporting time. This indicator shall recognize the credit balance of account 35211 “Primary insurance premiums and reinsurance premiums reserves”.

Primary insurance and reinsurance indemnity reserve (329.2):

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Catastrophe reserve (329.3):

This indicator recognizes amounts of catastrophe reserve at the reporting time. This indicator shall recognize the credit balance of account 3523 “Catastrophe reserve”.

Provision for long-term payables (337)

This indicator recognizes provision for long-term payables at the reporting time. This indicator shall recognize the credit balance of account 3524 “Provision for payables” (sub accounts: provisions for long-term payables).

Unearned revenue (338)

This indicator reflects unearned revenues at the reporting time. This indicator equals the credit balance of account 3387 “Unearned revenues” minus (-) unearned revenue from insurance commissions recognized in code 319.1.

Statutory reserve (419)

This indicator recognizes statutory reserve at the reporting time. This indicator shall recognize the credit balance of account 416 “Statutory reserve”.

2. Contents and methods of preparing income statement - Form B 02- DNPNT

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- Figures recorded in Column 5 “Previous year” of Part I and Part II of the Income statement of current year shall be those of respective indicators specified in Column 4 “Current year” of Part I and Part II of the Income statement of the previous year

- Indicators in Column 4 "Current year" shall be recorded as follows:

Part I- General income statement: Indicators in this part shall reflect figures in respective indicators in Part II – Operation-based income statement herein.

Part II- Operation-based income statement:

Insurance premium revenue (Code 01)

This indicator reflects total revenue from primary insurance business and reinsurance business after deduction of the following amounts: reductions in and/or refunds of primary premiums, reductions in and/or refunds of reinsurance premiums and decreases or increases in premium reserves related to primary insurance business and reinsurance business in the reporting period of the non-life insurance company.

Code 01 = Code 01.1 + Code 01.2 + Code 01.3

Primary insurance premium (Code 01.1)

This indicator reflects total revenue from primary insurance business minus (-) reductions in and/or refunds of primary premiums made in the reporting period of the non-life insurance company.

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Reinsurance premiums (Code 01.2)

This indicator reflects total revenue from reinsurance business minus (-) reductions in and/or refunds of reinsurance premiums made in the reporting period of the non-life insurance company.

This indicator equals the accumulated value on the credit side of account 5112 “Reinsurance premium revenue” minus (-) the accumulated value on the credit side of account 5312 – “Refund of reinsurance premiums”, account 5322 “Reduction in reinsurance premiums” and accounts 111, 112, 131 (sub accounts: reduction in reinsurance premiums due to reduction in scope of policy) and the debit side of account 5112 in the reporting period

Increase (decrease) in premium reserve of primary insurance and reinsurance (01.3):

This indicator reflects an increase or a decrease in unearned premium reserve of primary insurance and reinsurance which is the difference between amounts of unearned premium reserve of primary insurance and reinsurance to be set aside in the fiscal year and amounts of unearned premium reserve of primary insurance and reinsurance carriedforward from previous year

In case of increase, this indicator shall reflect the credit balance of account 35211 “Premium reserve of primary insurance and reinsurance” and debit balance of account 624 “Costs of insurance business” (Sub accounts 62412, 62422) in the reporting period.

In case of decrease, this indicator shall reflect the debit balance of account 35211 “Premium reserve of primary insurance and reinsurance” and credit balance of account 624 “Costs of insurance business” (Sub accounts 62412, 62422) in the reporting period, this indicator shall be recorded in negative numbers in round brackets (...)

Reinsurance ceded premiums (Code 02)

This indicator reflects total reinsurance ceded premium which must be paid to the reinsurer in the period minus (-) the increase/decrease in premium reserve for reinsurance ceded.

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Total amount of reinsurance ceded premiums (Code 02.1)

This indicator reflects the total amount of reinsurance ceded premium which must be paid to the reinsurer in the period.

This indicator shall reflect the accumulated value on the credit side of account 533 “Reinsurance ceded premium” and debit balance of account 511 “Revenues” (Sub accounts 5111, 5112) in the reporting period.

Increase (decrease) in premium reserve of reinsurance ceded (02.2)

This indicator reflects an increase or a decrease in premium reserve of reinsurance ceded which is the difference between amounts of premium reserve of reinsurance ceded to be set aside in the fiscal year and amounts of premium reserve of reinsurance ceded carriedforward from previous year

In case of increase, this indicator shall reflect the debit balance of account 35212 “Premium reserve of reinsurance ceded” and credit balance of account 624 “Costs of insurance business” (Sub accounts 62412, 62422).

In case of decrease, this indicator shall reflect the credit balance of account 35212 “Premium reserve of reinsurance ceded” and debit balance of account 624 “Costs of insurance business” (Sub accounts 62412, 62422), this indicator shall be recorded in negative numbers in round brackets (...).

Net premium revenue (Code 03)

This entry reflects total revenue from insurance business minus (-) reductions in and/or refunds of insurance premiums, premiums for reinsurance ceded and increases or decreases in premium reserve of primary insurance, reinsurance and reinsurance ceded of the non-life insurance company in the reporting period.

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Ceding commissions and revenue from other business operations (Code 04)

This indicator reflects amounts of ceding commission revenue and revenue from other business operations in the reporting period.

Code 04 = Code 04.1 + Code 04.2

Ceding commission (Code 04.1)

This indicator reflects total ceding commission revenue minus (-) refunds of and/or reductions in ceding commissions made in the reporting period.

This indicator shall reflect the accumulated value on the debit side of account 5113 “Ceding commission revenue” and credit balance of account 911 “Income summary” in the reporting period.

Revenue from other business operations (Code 04.2)

This indicator reflects revenue from business operations other than primary insurance, reinsurance business and reinsurance ceded such as revenue earned from provision of damage assessment and claim review handling services, request for third parties’ reimbursements, handling of fully compensated goods and other earnings in the period.

This indicator shall reflect the accumulated value on the debit side of account 5118 “Other revenue” and credit balance of account 911 “Income summary” in the reporting period.

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This entry reflects total revenue from insurance business, ceding commissions and other earnings from insurance business minus (-) reductions in insurance premium and/or ceding commissions, refunds of insurance premiums and/or ceding commissions, premiums for reinsurance ceded and increases or decreases in premium reserve of primary insurance, reinsurance and reinsurance ceded of the non-life insurance company in the reporting period.

Code 10 = Code 03 + Code 04

Payment of indemnities (11):

This indicator reflects total payment of indemnities of primary insurance, reinsurance and other payments related to indemnities when damage or loss occurs minus (-) amounts of receivables recorded as decreases in payment of indemnities including: receivables from third parties’ reimbursements, retrieval of goods handled and fully compensated of the non-life insurance company in the reporting period.

Code 11 = Code 11.1 - Code 11.2

Total payment of indemnities (11.1)

This indicator reflects total payment of indemnities of primary insurance, reinsurance and other payments related to indemnities when damage or loss occurs such as insurance payout to the insured, cost of damage assessment, inspection and collection of information related to insurance event, cost for handling of fully compensated goods of the non-life insurance company in the reporting period.

This indicator shall reflect the accumulated value on the debit side of account 624 “Costs of insurance business” (sub accounts: 62411, 62421) and credit balance of accounts 111, 112, 331, ect. in the reporting period.

Deductions (11.2)

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This indicator shall reflect the value on the debit side of account 131 “Trade receivables” and credit balance of accounts 624 “Costs of insurance business” (sub accounts: 62411, 62421) in the reporting period (receivables from third parties’ reimbursements, retrieval of goods handled and fully compensated).

Claim payments by reinsurers (Code 12)

This indicator reflects the amount of indemnities receivable from the reinsurer to decrease the amount of indemnities paid by the non-life insurance company in the reporting period.

This indicator shall reflect the value on the debit side of account 131 “Trade receivables” and credit balance of accounts 624 “Costs of insurance business” in the reporting period (Claim payments by reinsurers).

Increase (decrease) in indemnity reserve of primary insurance and reinsurance (13)

This indicator reflects an increase or a decrease in indemnity reserve of primary insurance and reinsurance which is the difference between amounts of indemnity reserve of primary insurance and reinsurance to be set aside in the fiscal year and amounts of indemnity reserve of primary insurance and reinsurance carriedforward from previous year

In case of increase, this indicator shall reflect the credit balance of account 35221 “Indemnity reserve of primary insurance and reinsurance” and debit balance of account 624 “Costs of insurance business” (Sub accounts 62413, 62423).

In case of decrease, this indicator shall reflect the debit balance of account 35221 “Indemnity reserve of primary insurance and reinsurance” and credit balance of account 624 “Costs of insurance business” (Sub accounts 62413, 62423), this indicator shall be recorded in negative numbers in round brackets (...).

Increase (decrease) in indemnity reserve of reinsurance ceded (14)

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In case of increase, this indicator shall reflect the debit balance of account 35222 “Indemnity reserve of reinsurance ceded” and credit balance of account 624 “Costs of insurance business” (Sub accounts 62413, 62423).

In case of decrease, this indicator shall reflect the debit balance of account 35222 “Indemnity reserve of reinsurance ceded” and credit balance of account 624 “Costs of insurance business” (Sub accounts 62413, 62423), this indicator shall be recorded in negative numbers in round brackets (...).

Total payment of insurance indemnities (15)

This indicator reflects the sum of indemnities paid by the non-life insurance company minus (-) amounts receivable to reduce indemnity costs, claim payments made by reinsurers after adjusting increase or decrease in reserves of primary insurance and reinsurance and increase or decrease in indemnity reserves of reinsurance ceded in the reporting period.

Code 15 = Code 11 - Code 12 + Code 13 – Code 14

Increase (Decrease) in catastrophe reserve (16)

This indicator reflects an increase or a decrease in catastrophe reserve which is the difference between amounts of catastrophe reserve to be set aside in the fiscal year and amounts of catastrophe reserve used in current year

In case of increase, this indicator shall reflect the credit balance of account 3523 “Catastrophe reserve” and debit balance of account 624 “Costs of insurance business” (Sub account 6245) minus (-) the debit balance of account 3523 “Catastrophe reserve” and credit balance of account 624 “Costs of insurance business” (sub account 6245) in the reporting period.

In case of decrease (the amount of catastrophe reserve used in the current year is larger than the amount to be set aside), the debit balance of account 3523 “Catastrophe reserve” and credit balance of account 624 “Costs of insurance business” (Sub account 6245) minus (-) the credit balance of account 3523 “Catastrophe reserve” and debit balance of account 624 “Costs of insurance business” (sub account 6245) in the reporting period shall be recorded in this indicator in negative numbers in round brackets (...)

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This indicator reflects payments of insurance commissions and other expenses incurred in the process of providing insurance services in the reporting period.

Code 17 = Code 17.1 + Code 17.2

Payment of insurance commission (Code 17.1)

This indicator reflects total insurance commission paid by the non-life insurance company in the period.

This indicator shall reflect the accumulated value on the credit side of account 624 “Costs of insurance business” (sub accounts: 62414, 62424) and credit balance of accounts 911 “Income summary” in the reporting period.

Other costs of insurance business operations (Code 17.2)

This indicator reflects other costs related to insurance business, including: Costs of agent services (damage assessment, consideration of indemnity settlement, request for third parties’ reimbursements), cost of risk assessment of the insured, cost of sales (management of insurance agents, wages of sales staff, material costs, office equipment expenses, depreciation expenses, etc. of the sales department), cost of prevention and reduction of losses, compulsory reserves as per the law (establishment of Fund for protection of the insured, etc.) and other costs related to insurance business in accordance with effective financial regulations.

This indicator shall reflect the accumulated value on the credit side of account 624 “Costs of insurance business” (sub accounts of 624 except for: 62411, 62412, 62413, 62414, 62421, 62422, 62423, 62424, 6245) and debit balance of accounts 911 “Income summary” in the reporting period.

Total costs of insurance business operations (Code 18)

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Code 18 = Code 15 + Code 16 + Code 17

Gross profit on insurance business (Code 19)

This indicator reflects the difference between the net revenue from insurance business and total costs of insurance business in the reporting period by the non-life insurance company.

Code 19 = Code 10 - Code 18

Revenue from investment properties (20)

This indicator reflects the revenue earned from trading in investment properties in the reporting period.

This indicator shall reflect the accumulated value on the debit side of account 5117 “Revenue from investment properties” and credit balance of account 911 “Income summary” in the reporting period.

Costs of investment properties (21)

This indicator reflects costs of investment properties and other expenses directly related to investment properties in the reporting period.

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Profit on investment properties (22)

This indicator reflects the difference between the revenue from investment properties and costs of investment properties in the reporting period.

Code 22 = Code 20 - Code 21

Financial income (23)

This indicator reflects the net income from financial activities in the reporting period.

This indicator shall reflect the accumulated value on the debit side of account 515 “Financial income” and credit balance of account 911 “Income summary” in the reporting period.

Financial expenses (24)

This indicator reflects financial expenses of the non-life insurance company in the reporting period.

This indicator shall reflect the accumulated value on the debit side of account 635 “Financial expenses” and credit balance of account 911 “Income summary” in the reporting period.

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This indicator reflects the difference between the net financial revenue and financial expenses in the reporting period by the non-life insurance company.

Code 25 = Code 23 - Code 24

General administration expenses (26)

This indicator reflects total general administration expenses, including: labor expenses, material expenses, office equipment expenses, depreciation of fixed assets, taxes and fees, provisions, costs of external services and other cash expenses incurred in the reporting period.

This indicator shall reflect the accumulated value on the credit side of account 642 “General administration expenses” and debit balance of account 911 “Income summary” in the reporting period.

Net profit on insurance business (Code 30)

This indicator reflects the business performance of the non-life insurance company in the reporting period. This indicator equals gross profit on insurance business plus (+) profit on investment properties plus (+) gross profit on financial activities minus (-) general administration expenses in the reporting period

Code 30 = Code 19 + Code 22 + Code 25 – Code 26

3. Contents and methods of preparing notes to financial statement (Form B 09 – DNPNT)

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Section IV – The following contents shall be applied to accounting regulations:

- At Point 11 - Rules and methods for recording revenues, notes of primary insurance premiums, reinsurance premiums, ceding commissions, revenues from other business operations and revenue deductions shall be supplemented.

- Name of Point 12 shall be changed into "Rules and methods for recording costs” with additional notes of payments of indemnities, payments of insurance commissions, expenses for services of insurance agents and decreases in costs of primary insurance and reinsurance business (such as claim payments made by reinsurers, receivables from third parties’ reimbursements and retrieval of goods handled and fully compensated).

- Point 16- Rules and methods for recording technical reserves shall be supplemented, in which notes of unearned premium reserve, claims reserve and catastrophe reserve shall be supplemented.

Section V – Information about items in the balance sheet is supplemented as follows:

- At Point 07 – Other long-term receivables, “guaranty fund” is supplemented.

- At Point 12- Increases, decreases in investment properties, part- notes of other figures and explanations, notes of methods of depreciation of investment properties, useful life of investment properties or depreciation rate, original cost and accumulated depreciation at the beginning and the end of accounting period, fair and reasonable price of investment properties at the end of the accounting year, etc. are supplemented.

- At Point 14- Long-term prepaid expenses, cost of insurance exploitation is supplemented.

- At Point 18- Other short-term payables, unearned revenue from insurance commissions is supplemented.

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- Point 25.2 – Payables related to insurance policies is supplemented so as to prepare notes of payables related to insurance business.

- Point 25.3- Short-term prepaid expenses are supplemented, in which notes of deferred expenses from insurance commissions and other short-term prepaid expenses are supplemented.

- Point 25.4- Technical reserve is supplemented, in which notes of unearned premium reserve, claims reserve and catastrophe reserve are supplemented.

- Point 25.5 - Reinsurance asset is supplemented, in which notes of premium reserve of reinsurance ceded and indemnity reserve of reinsurance ceded are supplemented.

Section VI- Additional information about items of the Income statement is amended, supplemented as follows:

- Point 26.1 – Insurance premium revenue is supplemented with the addition of notes of primary premiums and deductions thereof (reductions and refunds of primary premiums), reinsurance premiums and deductions thereof (reductions and refunds of reinsurance premiums), increases (decreases) in premium reserves of primary insurance and reinsurance

- Point 26.2- Premium for reinsurance ceded is supplemented, in which notes of total premium for reinsurance ceded and increases (decreases) in indemnity reserve of reinsurance ceded are supplemented.

- Point 27.1- Ceding commission is supplemented with the addition of notes of ceding commissions and deductions thereof (refunds and reductions in ceding commissions).

- Point 27.2 – Revenue from other business operation is supplemented with the addition of notes of payments of agent services (such as damage assessment, claim review services, request for third parties’ reimbursements and handling of fully compensated goods) and other earnings from insurance business.

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- Point 28.2- Other costs of insurance business is supplemented so as to prepare notes of expenses from insurance commissions and other costs related to insurance business such as costs of agent services, cost of risk assessment of the insured, selling expense (management of insurance agents, wages of sales staff, material costs, office equipment expenses, fixed asset depreciation expenses, etc. of the sales department), cost of prevention and reduction of losses, compulsory reserves as per the law (establishment of Fund for protection of the insured, etc.) and other costs related to insurance business.

- Point 33.1. General administration expense is supplemented with detailed notes of labor expenses, material expenses, office equipment expenses, depreciation of fixed assets, taxes and fees, provisions, costs of external services and other cash expenses.

Section VIII – Other information is supplemented and amended as follows:

- Point 1 is supplemented with notes of insurance risks and risk management policies applied to non-life insurance companies, notes of claims of non-life insurance companies, including: notes of insurance risks according to each primary insurance, reinsurance and reinsurance ceded, each line of insurance and each geographic scope, each policy of the non-life insurance company to reduce risks from insurance policies, analyze the sensitivity of insurance risks and insurance risk concentration, make notes of claims payment so as to compare the actual payment of indemnities with estimated amounts through the “Table of compilation of data on indemnities”.

(Specific contents of the amendments are specified in Form B09-DNPNT enclosed hereof)

Contents and methods of preparing certain items amended, supplemented in notes to financial statement

Receivables related to insurance policies (Point 25.1)

This entry reflects amounts receivable related to insurance business, including: primary insurance receivable (receivables from policyholders, receivables from agents, receivables from insurance brokers, receivables from enterprises participating in coinsurance), receivables from reinsurance premiums, receivables from indemnity of reinsurance ceded, receivables from indemnities of enterprises participating in coinsurance and other receivables (receivables from third parties’ reimbursements, retrieval of goods handled and fully compensated, etc.) in the reporting period of the non-life insurance company.

This indicator shall reflect debit balance of account 131 “Trade receivables” (sub accounts: primary premiums receivable, reinsurance premiums receivable, indemnity payments by reinsurers, indemnity payments by enterprises participating in coinsurance) at the reporting period.

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This indicator reflects amounts payable related to insurance business, including: payables of reinsurance and reinsurance ceded, payables to enterprises participating in coinsurance, payables of indemnities, insurance commissions and other payables in the reporting period of the non-life insurance company.

This indicator shall reflect debit balance of account 331 “Trade payables” (sub accounts: payables of reinsurance and reinsurance ceded premiums, payables to enterprises participating in coinsurance, payables of indemnities, insurance commissions and other payables) at the reporting period.

Technical reserves (25.4)

This indicator reflects technical reserves of the non-life insurance company, including claims reserve, unearned premium reserve and catastrophe reserve at the reporting time.

Non-life insurance companies shall set aside technical reserves in accordance with applicable financial regulations so as to use as the basis for preparing notes of claims reserve, unearned premium reserve over primary insurance premium and reinsurance premium (after reducing deductions and refunds of premiums) and claims reserve, unearned premium reserve over reinsurance ceded premium.

This indicator includes the following sub indicators:

Unearned premiums reverse and claims reserve (Point 25.4.1)

This indicator reflects claims reserves including reserve for claim requests not yet been resolved, reserve for losses that have occurred but have not been reported and unearned premium reserve at the reporting time.

The amount of reserve for losses that have occurred but have not been reported shall be set aside immediately upon determination, if not, the non-life insurance shall determine such amount by December 31, 2014 so as to prepare the notes.

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Column 2, section 1 shall reflect the credit balance of account 35221 “Indemnity reserve of primary insurance and reinsurance” at the reporting time.

Column 3, section 1 shall reflect the debit balance of account 35222 “Indemnity reserve of reinsurance ceded” at the reporting time.

Column 2, section 2 shall reflect the credit balance of account 35211 “Indemnity reserve of primary insurance and reinsurance” at the reporting time.

Column 3, section 2 shall reflect the debit balance of account 35212 “Premium reserve of reinsurance ceded” at the reporting time.

Column 4 = column 2 – column 3

Claims reserve - Section (1)

This indicator reflects increases and decreases of claims reserve which are due to additional setting aside or reverse of reserve in the reporting period. Notes of reserve which is required to be set aside or reversed shall specify the basis of the setting aside or reverse (if quantifiable), e.g. estimated change in average claim expense, change in average claim case, etc.

Figures in column 5, 6, 7 of the current year are based on the figures in column 2, 3, 4 of last year’s report.

Column 2 shall reflect the credit balance at the beginning of the period, the value on the credit and debit side in the period and the credit balance at the end of the period of account 35221 “Indemnity reserve of primary insurance and reinsurance”.

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Column 4 = column 2 – column 3

Unearned premium reverse - Section (2)

This indicator reflects increases and decreases of unearned premium reserve which are due to additional setting up or reverse of reserve in the reporting period.

Figures in column 5, 6, 7 of the current year are based on the figures in column 2, 3, 4 of last year’s report.

Column 2 shall reflect the credit balance at the beginning of the period, the value on the credit and debit side in the period and the credit balance at the end of the period of account 35211 “Premium reserve of primary insurance and reinsurance”.

Column 3 shall reflect the debit balance at the beginning of the period, the value on the credit and debit side in the period and the debit balance at the end of the period of account 35212 “Premium reserve of reinsurance ceded”.

Column 4 = column 2 – column 3

Catastrophe reserve (Point 25.4.2)

This indicator reflects increases and decreases of catastrophe reserve which are due to additional setting aside or use in the period.

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Reinsurance assets (Point 25.5)

This indicator recognizes amounts of reinsurance ceded premium reserve and reinsurance ceded indemnity reserve at the beginning of the year and the end of the reporting period.

- “Premium reserve of reinsurance ceded” shall reflect the debit balance at the beginning and at the end of the period of account 35212 “Premium reserve of reinsurance ceded”.

- “Indemnity reserve of reinsurance ceded” shall reflect the debit balance at the beginning and at the end of the period of account 35222 “Indemnity reserve of reinsurance ceded”.

Method of preparing the “Table of compilation of data on indemnities” (Part VIII, Point 1.5):

A table of compilation of data on indemnities is established in a fiscal year so as to compare the actual payment of indemnities with estimated amounts. Enterprises shall carry out the statistic of indemnities according to the actual payment of indemnities from January 1, 2014 to provide data for table of compilation of data on indemnities since the fiscal year of 2016 as follows:

- Fiscal year of 2016, enterprises shall prepare the table of compilation of data on indemnities for 3 years (2014, 2015, 2016).

- Fiscal year of 2017, enterprises shall prepare the table of compilation of data on indemnities for 4 years (2014, 2015, 2016, 2017).

- Fiscal year of 2018, enterprises shall prepare the table of compilation of data on indemnities for 5 years (2014, 2015, 2016, 2017, 2018).

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This table reflects the statistic of indemnity payment of previous years by the operation division.

Section I- Estimated accumulated payment of indemnities reflects estimated amounts of accumulated payment of indemnities in the year of losses, specifically:

- Column 1 (2014): Amounts of estimated cumulative payment of indemnities for losses occurred in 2014:

+ Line 1, column 1 (2014): Amounts of estimated cumulative payment of indemnities until the end of the first year of payment (2014) for losses occurred in 2014.

+ Line 2, column 1 (2014): Amounts of estimated cumulative payment of indemnities until the end of the second year of payment (2015) for losses occurred in 2014.

+ Line 3, column 1 (2014): Amounts of estimated cumulative payment of indemnities until the end of the third year of payment (2016) for losses occurred in 2014.

+ Line 4, column 1 (2014): Amounts of estimated cumulative payment of indemnities until the end of the fourth year of payment (2017) for losses occurred in 2014.

+ Line 5, column 1 (2014): Amounts of estimated cumulative payment of indemnities until the end of the fifth year of payment (2018) for losses occurred in 2014.

+ Line of amounts of cumulative payment of indemnities until current year - Section (1), column 1 (2014): Amounts of estimated cumulative payment of indemnities until the end of 2018 for losses occurred in 2014.

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+ Line 1, column 2 (2015): Amount of estimated cumulative payment of indemnities until the end of the first year of payment (2015) for losses occurred in 2015.

+ Line 2, column 2 (2015): Amount of estimated cumulative payment of indemnities until the end of the second year of payment (2016) for losses occurred in 2015.

+ Line 3, column 2 (2015): Amount of estimated cumulative payment of indemnities until the end of the third year of payment (2017) for losses occurred in 2015.

+ Line 4, column 2 (2015): Amount of estimated cumulative payment of indemnities until the end of the fourth year of payment (2018) for losses occurred in 2015.

+ Line of amounts of cumulative payment of indemnities until current year - Section (1), column 2 (2015): Amounts of estimated cumulative payment of indemnities until the end of 2018 for losses occurred in 2015.

- Column 3 (2016): Amounts of estimated cumulative payment of indemnities for losses occurred in 2016:

+ Line 1, column 3 (2016): Amount of estimated cumulative payment of indemnities until the end of the first year of payment (2016) for losses occurred in 2016.

+ Line 2, column 3 (2016): Amount of estimated cumulative payment of indemnities until the end of the second year of payment (2017) for losses occurred in 2016.

+ Line 3, column 3 (2016): Amount of estimated cumulative payment of indemnities until the end of the third year of payment (2018) for losses occurred in 2016.

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- Column 4 (2017): Amounts of estimated cumulative payment of indemnities for losses occurred in 2017:

+ Line 1, column 4 (2017): Amount of estimated cumulative payment of indemnities until the end of the first year of payment (2017) for losses occurred in 2017.

+ Line 2, column 4 (2017): Amount of estimated cumulative payment of indemnities until the end of the second year of payment (2018) for losses occurred in 2017.

+ Line of amounts of cumulative payment of indemnities until current year - Section (1), column 4 (2017): amounts of estimated cumulative payment of indemnities until the end of 2018 for losses occurred in 2017.

- Column 5 (2018): Amounts of estimated cumulative payment of indemnities for losses occurred in 2018:

+ Line 1, column 5 (2018): Amount of estimated cumulative payment of indemnities until the end of the first year of payment (2018) for losses occurred in 2018.

+ Line of amounts of cumulative payment of indemnities until current year - Section (1), column 5 (2018): Amounts of estimated cumulative payment of indemnities until the end of 2018 for losses occurred in 2018.

- Column 6 reflects the total amount of estimated cumulative payment of indemnities of 5 years (from 2014 to 2018).

Section II- Cumulative indemnities that have been paid: Reflects the amount of cumulative indemnities that have been paid for losses occurred. This indicator reflects amounts of cumulative indemnities that have been paid in the year of losses, specifically:

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+ Line 1, column 1 (2014): Amount of cumulative indemnities that have been paid at the end of the first year of payment (2014) for losses occurred in 2014.

+ Line 2, column 1 (2014): Amount of cumulative indemnities that have been paid at the end of the second year of payment (2015) for losses occurred in 2014.

+ Line 3, column 1 (2014): Amount of cumulative indemnities that have been paid at the end of the third year of payment (2016) for losses occurred in 2014.

+ Line 4, column 1 (2014): Amount of cumulative indemnities that have been paid at the end of the fourth year of payment (2017) for losses occurred in 2014.

+ Line 5, column 1 (2014): Amount of cumulative indemnities that have been paid at the end of the fifth year of payment (2018) for losses occurred in 2014.

+ Line of the amount of cumulative indemnities that have been paid in the current year - Section (2), column 1 (2014): Amount of cumulative indemnities that have been paid at the end of 2018 for losses occurred in 2014.

- Column 2 (2015): Amounts of cumulative indemnities that have been paid for losses occurred in 2015:

+ Line 1, column 2 (2015): Amount of cumulative indemnities that have been paid at the end of the first year of payment (2015) for losses occurred in 2015.

+ Line 2, column 2 (2015): Amount of cumulative indemnities that have been paid at the end of the second year of payment (2016) for losses occurred in 2015.

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+ Line 4, column 2 (2015): Amount of cumulative indemnities that have been paid at the end of the fourth year of payment (2018) for losses occurred in 2015.

+ Line of the amount of cumulative indemnities that have been paid in the current year - Section (1), column 2 (2015):

Amount of cumulative indemnities that have been paid at the end of 2018 for losses occurred in 2015

- Column 3 (2016): Amounts of cumulative indemnities that have been paid for losses occurred in 2016:

+ Line 1, column 3 (2016): Amount of cumulative indemnities that have been paid at the end of the first year of payment (2016) for losses occurred in 2016.

+ Line 2, column 3 (2016): Amount of cumulative indemnities that have been paid at the end of the second year of payment (2017) for losses occurred in 2016.

+ Line 3, column 3 (2016): Amount of cumulative indemnities that have been paid at the end of the third year of payment (2018) for losses occurred in 2016.

+ Line of the amount of cumulative indemnities that have been paid in the current year - Section (1), column 3 (2016):

Amount of cumulative indemnities that have been paid at the end of 2018 for losses occurred in 2016

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+ Line 1, column 4 (2017): Amount of cumulative indemnities that have been paid at the end of the first year of payment (2017) for losses occurred in 2017.

+ Line 2, column 4 (2017): Amount of cumulative indemnities that have been paid at the end of the second year of payment (2018) for losses occurred in 2017.

+ Line of the amount of cumulative indemnities that have been paid in the current year - Section (1), column 4 (2017): Amount of cumulative indemnities that have been paid at the end of 2018 for losses occurred in 2017.

- Column 5 (2018): Amounts of cumulative indemnities that have been paid for losses occurred in 2018:

+ Line 1, column 5 (2018): Amount of cumulative indemnities that have been paid at the end of the first year of payment (2018) for losses occurred in 2018.

+ Line of the amount of cumulative indemnities that have been paid in the current year - Section (1), column 5 (2018): Amount of cumulative indemnities that have been paid at the end of 2018 for losses occurred in 2018.

- Column 6 reflects the total amount of cumulative indemnities has been paid in 5 years (from 2014 to 2018).

Section III – Total claims reserve not yet been resolved: Reflects the total amount of claims reserve not yet been resolved (3) = (1) - (2)

Section IV- Estimated surplus or deficit of claims reserve (4): Reflects the estimated amount of surplus or deficit of claims reserve at the reporting time. Figures in this indicator are based on the estimated amount of surplus or deficit of reserve calculated by the operation division.

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4. Contents and methods for preparing cash flow statement and those for preparing interim financial statements shall comply with applicable corporate accounting regulations (Corporate accounting regulations issued together with the Ministry of Finance’s Decision No. 20/3/2006 dated March 20, 2006 and the Circulars guiding the amendment and supplementation of the corporate accounting regulations).

Article 23. Effect and implementation

1. This Circular shall come into force as of January 01, 2014 and begin to take effect from the fiscal year of 2014.

Regulations on accounting of non-life insurance companies in the Decision No. 1296/TC/QD/CDKT dated December 31, 1996 of Minister of Finance and the Decision No. 150/2001/QD-BTC dated December 31, 2001 on amendments to regulations on accounting of life insurers in the Decision No. 1296/TC/QD/CDKT dated December 31, 1996 of Minister of Finance shall be null and void as from January 01, 2014

2. Director of the Department of Accounting & Auditing Regulations, Director of Insurance Supervisory Authority, Directors of non-life insurance companies, Directors of reinsurance companies, Directors of branches of foreign non-life insurance companies and heads of relevant units shall implement this Circular.

3. Difficulties that arise during the implementation of this Circular should be reported to the Ministry of Finance for consideration./.

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