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A Quick Guide on Accounting for Insurance Companies

Last updated: 14 Nov, 2018 By | 6 Minutes Read

Accounting is an integral part of any business. It is essential for a business to maintain proper accounting records for keeping an eye on the financial transactions and ensuring proper future planning. Insurance companies are not an exception in this regard. Insurance accounting services can help in running the business in a systematic manner by maintaining the accounts receivables and payable properly, ensuring the right taxation process, eradicating unscrupulous practices etc.

Accounting for Insurance Companies can be made more effective by using the below-mentioned guidelines: 

Hire Professional Accountant/Accountants –

There are cases in insurance agencies, where staff members who are not specialized in accounting are given the job of maintaining financial records. In some cases, the owners perform these operations themselves. If the right results are not attained by using these procedures, then specialized accounting staff should be kept.

A Correct Record of Income & Expenditure should be Maintained –

In order to evaluate the correct profitability of an insurance business, all the income and expenditure transactions must be properly recorded by the accounting team. This can help in planning strategies for eradication of unnecessary expenses and further enhancement of profits.

Allocate a Proper Budget –

A business venture is all about investing money and then earning profits. There are certain operational expenses which cannot be avoided but it is essential to ensure that costs are minimized.  A budget should be prepared and the management should ensure that the costs do not cross the planned budget.

Keep the Business & Personal Expenses Separate –

If the personal expenses of the owner are mixed with the business expenses, then the right financial details cannot be ascertained. So the personal and business expenses should be kept separate.

Outsourcing can be Considered –

For insurance agencies who want to ensure that their in-house staff is focused on revenue generation activities, outsourcing the accounting functions is a good option. The outsourcing firms are fully capable of performing the accounting operations at affordable costs within the required deadlines.

Ensure that the Taxation Process is Carried out Properly

An insurance agency must ensure that the taxes are paid before the deadline to avoid penalties from government agencies. Availing all the tax deductions is also necessary and professional accountants can also help in this regard.

Using Family Members or Other Reliable People for Accounting Operations –

The efficiency and accuracy of the accounting process cannot be compromised. So hiring family members or other reliable people for this purpose is a very good idea.

Investing in the Latest Technology –

By investing in the latest accounting software like NetSuite, QuickBooks etc., insurance firms can make their accounting operations prompt and simpler. These software offer full value for money and are easy to use even for people with limited knowledge of accountancy.

All these tips can be considered by an insurance firm to make their accounting processes better.

Recommended Post: Top 10 Financial & Accounting Tips for Insurance Agencies

Cogneesol is a leading provider of outsourcing accounting and back-office services to insurance businesses looking for cost-cutting and profit optimization solutions. To get more information, contact us at info@cogneesol.com or call us at +1 646 688 2821.

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