How to record reinsurance audit premium
Recording an increase in reinsurance premium expense resulting from an audit of the underlying exposures by the reinsurer.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Reinsurance Premium Expense | Debit | 15,000.00 | - |
| Reinsurance Payable | Credit | - | 15,000.00 |
💡 Accountant's Note
If a reinsurance treaty is based on a variable exposure (like payroll or sales), an audit at the end of the period may result in additional premium owed. This entry recognizes the extra expense and liability.
Practitioner & Systems Framework
💻 ERP Architecture
Ensure the expense is coded to the correct underwriting year to maintain accurate loss ratios.
⚠️ Audit Flags
Large audit adjustments suggest that initial premium estimates were significantly understated.
📄 Required Documentation
Reinsurance audit report, endorsement from the reinsurer, and recalculated bordereau.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
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