DETERMINING OF FINANCIAL RESULTS IN PROPERTY AND PERSONAL INSURANCE

In property and personal insurance it is necessary to determine technical and financial result as realistically as possible. In addition, financial result should, if possible, at least equal the amount of earned technical result, and should be expressed as equalization reserve within the total equity, while after a three-year period it may be used for payment of dividends to the shareholders and increase in equity of the insurance company. In addition to technical reserves and equity, including reserves generated on various bases, the property and personal insurance should include risk reserves, since risk balancing (of risk premium and claim settlements) is achieved in either a longer or a shorter period, depending on the number of objects insured. Thus, one-year positive financial result does not mean the generation of capital from profit. This will happen only if a positive financial result is achieved in the subsequent years, as well.