At year-end closing, group insurance is rarely among the big items – but if it is untidy, it eats a disproportionate amount of time. Three things are worth maintaining during the year as well: the balance, the periods and the papers. Then this line becomes routine for your accountant, not an investigation.
Account reconciliation with the insurer
The basis: premiums due and actual payments should match. In a group contract, the most common source of differences is headcount movement: corrections for joiners and leavers appear as credits or additional charges on the premium notices. Ask the insurer for a year-end balance summary or account statement – as your broker, I help obtain it – and pair it with the bank items. Discipline in the payment reference pays off here most visibly; we wrote about it in the article on the paperwork of paying. A good moment for the reconciliation is the weeks before the financial statements are prepared: by then the year-end premium notices and late-arriving corrections are visible, and the picture is complete. If a suspense item remains, clear it up then – later, everyone is busy with something else.
Accruals: the question that must be asked
If the company pays a yearly or half-yearly premium and the cover period straddles the business year, the question of accruals can arise. The portion of the premium falling on the next business year must be accrued under the accounting rules; whether this actually happens alongside the payment schedule, in what breakdown, and above what materiality threshold, is for the company's accounting policy and the accountant to decide. Our job is to make sure the cover period is clearly visible on the premium notices; if it is not, we request the breakdown from the insurer. What helps the accountant's decision most is when the contract and the premium notice make it unambiguous which months the paid premium covers – information worth collecting during the year, not in the final sprint of closing.
The document list your accountant will look for
- the contract and policy in force, with the definition of the insured circle,
- premium notices and statements in date order, with the bank confirmations,
- lists of insured persons and change reports,
- the anniversary notice and the correspondence on mid-year amendments,
- the benefits policy or internal decision,
- the insurer's year-end balance summary.
If these six elements are in place, most year-end questions never even come up. The list is not long, but kept scattered it can cost hours – the shared digital folder is the simplest solution here too. The good questions of deductibility have their own article: Is the premium a deductible business cost?
Year-end and anniversary: connect the two
Year-end closing is also a good occasion for a substantive review of the contract: does the headcount still match, do the tiers and cover amounts still fit – and is the premium still competitive. That round is walked through in the review on request article; the How it works page gives a picture of the whole process. If the two dates do not coincide, that is no problem either: the year-end document round is still a good dress rehearsal for the anniversary discussion – and re-running the premium competition is not disloyalty, it is sober management.
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