Consumer Financing Receivables Summary of Significant Accounting and Financial Reporting Policies
PT SINAR MAS MULTIARTHA Tbk AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements
For the Years Ended December 31, 2014 and 2013 Figures are Presented in Millions of Rupiah,unless Otherwise Stated
Reinsurance Assets Reinsurance assets are the cedants net contractual rights under a reinsurance contract.
The amount of reinsurance asset of the liability for future policy benefits, unearned premiums and estimated claims liability are estimated in a manner consistent with the
approach used in determining the liability for future policy benefits, unearned premiums and claims liability estimates, based on the terms and the terms of the insurance contract.
The Group’s management assesses at each consolidated statement of financial position date whether reinsurance assets are impaired. Reinsurance asset impairment occurs if, and
only if, there is an objective evidence that the cedant did not receive the entire amount in accordance with the contract requirements and the impact can be measured reliably.
Impairment loss is recognized in the consolidated of statement of comprehensive income.
Liabilities for Future Policy Benefits Liabilities for future policy benefits represent the difference between the present value of
future policy benefits and the present value of the expected future premiums. The liabilities for future policy benefits are estimated by the Company’s registered actuary
based on outstanding policies in-force, including policies with unpaid premiums within the policy grace period, in accordance with actuarial principles generally accepted in Indonesia.
Policy acquisition costs are not deferred and are charged to expense as incurred. Changes in liabilities for insurance policy benefits are recognized as underwriting expenses in the
consolidated statement of comprehensive income for the current year. Unearned Premiums and Estimated Claims Liability
Unearned premiums are calculated using the daily method by individual policy.
Estimated claims liability represents amounts set aside to provide for the outstanding and incurred claims arising from insurance policies in force during the accounting period. The
liability includes both reported and unreported claims.
Insurance Contract Liabilities Insurance contract liabilities consist of premiums received in advance, estimated claim
liabilities, unearned premium and liability for future policy benefits. On reporting date, the Group assesses insurance contract liabilities whether the recognized insurance liabilities are
adequate using current estimates of future cash flow under the insurance contract. If the assessment represent insurance liability less related deferred acquisition cost is not
adequate if compared to current estimates of future cash flows, the deficiency is recognized in the consolidated statement of comprehensive income.