What is a Capital Consumption Allowance?

Insurance capital refers to capital invested in insurance and engaged in business operations.

Insurance capital

Right!

Insurance capital refers to capital invested in insurance and engaged in business operations.

Chinese name

Insurance capital

Solid

Capital engaged in business operations

To source

Own capital, insurance reserves, etc.

Nature

Embody different social production relations

To start an insurance company, like other companies, you must own a certain amount of capital, which should be used as fixed capital and working capital to purchase housing equipment, appliances and payable expenses. At the same time, a certain amount of capital is required as insurance compensation Reserves to cover larger amounts of compensation.

In the early days of starting an insurance company, without a certain amount of capital accumulation, it is impossible to cope with large amounts of compensation based on limited insurance premium income. Therefore, a certain amount of cash capital must be prepared. Some countries have also stipulated that the face value of shares issued by newly established insurance companies must be lower than the actual amount of shares paid by shareholders. The actual amount of shares paid above the par value of the stock is called a surplus, which is used as insurance reserves at the beginning stage. At the same time, in order to ensure the interests of the insured, some Weijia also have provisions on security deposits.

The sources of capital for insurance companies generally have the following aspects.

1. Owned capital. Owned capital is mainly operating capital raised by insurance companies.

2. Insurance reserve. The insurance reserve is the capital that insurance companies withdraw from insurance premium income in accordance with the relevant government regulations and bear the specific needs of unexpired liabilities and outstanding claims provision.

3. Bank loans. Bank loans are borrowing capital that insurance companies raise from banks and other financial institutions.

4. Investment income. Investment income is the profit income obtained by insurance companies participating in social industrial and commercial production and operation activities by using insurance reserves.

5. Government funding. Government appropriation is the start-up fee (operating capital) allocated by the government to insurance companies.

The above four sources of capital are the sources of capital of most insurance companies. In some countries, they mainly refer to countries that implement national insurance. The sources of capital of insurance companies are mainly government grants, insurance reserves and investment income.

In different social forms, insurance capital also reflects different social production relations. This is the essence of insurance capital. Of course, under different social forms, the social production relations it embodies are different and different.