How to Record Intercompany Insurance Premiums
Recording the payment for insurance coverage provided by a captive insurance subsidiary to an operating entity.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Intercompany Insurance Expense | Debit | 12,000.00 | - |
| Intercompany Payable - Captive Entity | Credit | - | 12,000.00 |
💡 Accountant's Note
Operating subsidiaries record insurance expenses when premiums are paid to a group captive. The pricing must reflect arm's length actuarial risk assessments.
Practitioner & Systems Framework
💻 ERP Architecture
Set up recurring journal entries linked to the captive's policy issuance cycle.
⚠️ Audit Flags
Premiums significantly higher than external market quotes for similar risk profiles.
📄 Required Documentation
Actuarial report, insurance policy contract, and proof of risk transfer.
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