GDP & Life Insurance
Insurance: There are two types of insurance; life and non-life insurance. Life insurance is an activity whereby a policyholder makes regular payments to an insurer in return for which the insurer guarantees to provide the policyholder with an agreed sum, or an annuity, at a given date or earlier if the policyholder dies beforehand. Non-life insurance covers all other risks; accidents, sickness, fire etc. A policy that provides a benefit in the case of death within a given period but in no other circumstances, usually called term insurance, is regarded as non-life insurance because as with other non-life insurance, a claim is payable only if a specified contingency occurs and not otherwise.
18.24 The output of insurance represents the value of the service provided by insurance corporations in arranging payments of claims and benefits in exchange for the receipts of premiums and contributions. Premiums are usually paid regularly, often at the start of an insurance period, whereas claims fall due later. In the mean time between the payment of premiums being made and the claim being receivable, the sum involved is at the disposal of the insurance corporation to invest and earn income from it. The income thus earned allows the insurance corporations to charge lower premiums than would be the case otherwise. This income comes from the investment of the technical reserves of the insurance corporations, which are assets of the policyholders, and does not include any income from the investment of the insurance corporations’ own funds. The technical reserves of an insurance corporation consist of pre-paid premiums, reserves against outstanding claims, actuarial reserves for life insurance and reserves for with-profit insurance. The output of the insurance activity, which represents the service provided to policyholders, is calculated separately for life and non-life insurance as: Total actual premiums or contributions earned; Plus total premium or contribution supplements; Less claims or benefits due; Less increases (plus decreases) in actuarial reserves and reserves for with- profit insurance.
18.25 Life insurance: The annual Report and Accounts published by the LIC give necessary details for preparation of the estimates of GVA. In respect of private life insurance companies, data is available in their annual accounts and these are collected and analysed in the CSO.
18.26 The GVA by the life insurance business conducted by the Department of Posts is estimated by analysing the 'Appropriation Accounts' brought out by the same department. Profits and dividends are assumed to be nil. [From National Accounts Statistics - Sources and Methods, 2007, Chapter 18]
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