The financial accounting of insurance industry is a complex system that involves numerous potential risk coverage transactions. The insurance business is among the exciting businesses where accounting professionals want to start their professions to gain a strong training ground on their careers.
The insurance sector contributes to the well-being of the clients as well as the economic growth of the country. It involves risk management, mobilization of savings, and resources allocation. The role of an insurance accountant is to complete numerous accounting transactions daily.
A competent insurance accountant plays an important role in the insurance industry. The following are the main responsibilities of an insurance accountant to handle in his day-to-day job:
- Decision making
This is a crucial function of an insurance accountant because it involves the accuracy of financial reports submitted to management. These financial reports reflect the financial stability of the business which is an essential factor that influences good decision-making of the insurance entrepreneur on planning a budget to reduce expenses. The accountant also helps management analyse the strategies being implemented and gives inputs on how they should be carried out.
- Claims management
This is a complex task that involves many documentation and calculations. The accountant does all the computations of the number of claims and the corresponding required government taxes that are included in the computation. Claims management must be handled in the most accurate and speedy manner to achieve customer satisfaction which is an essential part to increase customer demand.
- Records management
Proper records management is essential in an insurance business to create a smooth flow of the transaction process. Maintaining a good system in records keeping makes tax preparations convenient for the accounting department to achieve. Modern technology now allows storage of data in an accounting software through cloud-based method making it more convenient to access.
- Fraud detection and prevention
An accountant is responsible for ensuring that all transactions of the business follow the basic standards and ethics of the industry. Any fraudulent transaction must be properly handled and resolved.
- Payroll processing
This is also a complex area in the insurance business. The accountant must ensure that commissions are properly compensated. Compensating the commissions of agents require proper monitoring which is a complex task. Managing the payroll of in-house employees also requires accuracy and systematic processing.
The accountant also does asset valuation, auditing, analysis of investment opportunities, tax preparation, and maintenance of cash flow.
The role of an accountant in the insurance business is important as it ensures the good status of the financial position of the company.