Question 2. Underwritten profit. From company records you ascertain that at the end of the year, you are given the following data. 1. the accounting department had unpaid claims amounting to K 4, 000.00, 2. claims amounting to K 10,000.00 was paid the accounting department during the period. 3. in the claims underwriting department, the monthly report for the final month of the accounting period shows that the claims that were waiting for claims to be settled amounted to K 2,400.00 of which claims amounting to K 1,400 had not been agreed with loss adjusters and clients. 4. The Claims Manager had included a contingent amount of expected loss not brought to the attention of the Insurer amounting to K 2, 100.00. 5. You are further informed that underwriting expense reserves for unearned premium which stood at K6, 000 6. Written premiums were 15% higher than Earned Premiums. 7. Earned premiums (are those premiums for which the service for which the premiums were paid (insurance protection) has been rendered was K 30, 000 8. Other payments made include; a. the cost of adjusting claims, K 2,600.00 paying the insured losses that occurred b. commissions to agents K 4,000.00 c. premium taxes and levies K 2,400.00 d. general insurance expenses K 4,600.00 You are required to do the following; -Describe FIVE (5) areas that are regulated by the Regulator of the Insurance Industry -Explain what is meant by the term Insurance. -Calculate the value of underwriting expenses that would be include in the Financial statements -Compute the value of Underwriting profit? Prepare an extract that would appear in the financial statements
Question 2. Underwritten profit.
From company records you ascertain that at the end of the year, you are given the
following data.
1. the accounting department had unpaid claims amounting to K 4, 000.00,
2. claims amounting to K 10,000.00 was paid the accounting department during the
period.
3. in the claims underwriting department, the monthly report for the final month of the
accounting period shows that the claims that were waiting for claims to be settled
amounted to K 2,400.00 of which claims amounting to K 1,400 had not been
agreed with loss adjusters and clients.
4. The Claims Manager had included a contingent amount of expected loss not
brought to the attention of the Insurer amounting to K 2, 100.00.
5. You are further informed that underwriting expense reserves for unearned
premium which stood at K6, 000
6. Written premiums were 15% higher than Earned Premiums.
7. Earned premiums (are those premiums for which the service for which the
premiums were paid (insurance protection) has been rendered was K 30, 000
8. Other payments made include;
a. the cost of adjusting claims, K 2,600.00 paying the insured losses
that occurred
b. commissions to agents K 4,000.00
c. premium taxes and levies K 2,400.00
d. general insurance expenses K 4,600.00
You are required to do the following;
-Describe FIVE (5) areas that are regulated by the Regulator of the Insurance Industry
-Explain what is meant by the term Insurance.
-Calculate the value of underwriting expenses that would be include in the Financial statements
-Compute the value of Underwriting profit? Prepare an extract that would appear in the financial statements
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