Definition
In recent years this kind of operational definition proved inadequate as a result of contracts that had the form but not the substance of insurance. The essence of insurance is the transfer of risk from the insured to one or more insurers. How much risk a contract actually transfers proved to be at the heart of the controversy. This issue arose most clearly in reinsurance, where the use of Financial Reinsurance to reengineer insurer balance sheets under US GAAP became fashionable during the 1980s. The accounting profession raised serious concerns about the use of reinsurance in which little if any actual risk was transferred, and went on to address the issue in FAS 113, cited above. While on its face, FAS 113 is limited to accounting for reinsurance transactions, the guidance it contains is generally conceded to be equally applicable to US GAAP accounting for insurance transactions executed by commercial enterprises.
Read more about this topic: Insurance In The United States
Famous quotes containing the word definition:
“One definition of man is “an intelligence served by organs.””
—Ralph Waldo Emerson (1803–1882)
“The definition of good prose is proper words in their proper places; of good verse, the most proper words in their proper places. The propriety is in either case relative. The words in prose ought to express the intended meaning, and no more; if they attract attention to themselves, it is, in general, a fault.”
—Samuel Taylor Coleridge (1772–1834)
“It is very hard to give a just definition of love. The most we can say of it is this: that in the soul, it is a desire to rule; in the spirit, it is a sympathy; and in the body, it is but a hidden and subtle desire to possess—after many mysteries—what one loves.”
—François, Duc De La Rochefoucauld (1613–1680)