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Terms Beginning with D
       
       
 

Deferred Acquisition Costs

Insurance Term


Deferred Acquisition Costs (DAC) refers to the costs incurred by an insurance company over the process of acquiring a new policyholder, including marketing, advertising, commissions, and other related expenses. These costs are typically paid upfront by the insurance company, but benefit the company over the life of the policy. As such, the expenses are deferred or spread out over the duration of the policy, rather than being shown as an immediate expense on the company's financial statements.

DAC is used in the insurance industry as a way to allocate expenses and ensure accurate financial reporting. By deferring the costs over time, insurance companies are able to accurately match expenses to the premiums earned from policies, which helps to ensure the company remains financially stable and profitable. Additionally, DAC plays a significant role in the valuation of insurance companies, as it is used to determine the company's tangible net worth.

Overall, Deferred Acquisition Costs is an important component of insurance company's financial statements as it helps them allocate expenses over time and provide accurate financial reporting while maintaining profitability.


   
     

Deferred Acquisition Costs

Insurance Term


Deferred Acquisition Costs (DAC) refers to the costs incurred by an insurance company over the process of acquiring a new policyholder, including marketing, advertising, commissions, and other related expenses. These costs are typically paid upfront by the insurance company, but benefit the company over the life of the policy. As such, the expenses are deferred or spread out over the duration of the policy, rather than being shown as an immediate expense on the company's financial statements.

DAC is used in the insurance industry as a way to allocate expenses and ensure accurate financial reporting. By deferring the costs over time, insurance companies are able to accurately match expenses to the premiums earned from policies, which helps to ensure the company remains financially stable and profitable. Additionally, DAC plays a significant role in the valuation of insurance companies, as it is used to determine the company's tangible net worth.

Overall, Deferred Acquisition Costs is an important component of insurance company's financial statements as it helps them allocate expenses over time and provide accurate financial reporting while maintaining profitability.


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