Page 100 - Reinsurance Management IC85

Reinsurance Management

income tax on profits derived from premium
income. These being charges like 'Fire Brigade'
charges, are taken under an item "Taxes and
Charges" as cost for calculation purposes.

But generally, a reinsurer is liable to pay income tax
on profit earned in his country of residence. However,
if he has offices in a foreign country, profit arising
out of income from that country may be liable for
local income tax. Double Taxation Agreement among
different governments exists and the tax on profit will
be subject to these provisions. Also interest on
premium reserve released will be subject to income
tax under reciprocal treaties and the same may be
waived.

Q. Write Short Note on Catastrophic reserve
provision in accounts.

Ans: It is always difficult for a reinsurer to provide for
outstanding claims in his accounts. In respect of
proportional treaties, over a period of time the
premiums and claims advised by ceding company

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