Manual on Statistics of International Trade in Services

Box 4.   Estimation of insurance service charges  
International  insurance services are estimated or valued by service charges included in total premiums earned 
rather than by total premiums. In principle, the measurement of transactions in international insurance services 
recommended in the present Manual is consistent with that described in the 1993 SNA for insurance services for 
resident sectors. However, in practice, both BPM5 and 1993 SNA allow flows between residents and non-residents 
that are associated with investment income on insurance technical reserves to be ignored because of estimation 
problems, particularly for imports. 
Separate estimations should be made for each of the various types of insurance––freight, pension funding, other 
direct, reinsurance and life. 
For  freight insurance, the insurance service charges for resident insurers providing insurance services to non-
residents (credit) are estimated as the difference between premiums earned and claims payable on goods lost or 
destroyed in transit. It may be necessary to calculate the insurance service charge ratio (insurance service charge 
divided by total premiums payable) for a medium- or long-term period, and apply this ratio to premiums earned for 
each period. This applies particularly where claims payable exceed premiums earned for a particular period. 
The service charges for non-resident insurers providing freight insurance services to residents (debit) can be 
estimated by taking the ratio of estimated service charges to total premiums for exports of insurance services and 
applying the ratio to total premiums payable to non-resident insurers. The ratio should be based on a medium- to 
long-term period. 
For pension funding and other direct insurance, insurance services may be estimated in a similar manner to that 
for estimating freight insurance. That is, service charges for resident insurers providing services to non-residents 
are estimated as the difference between premiums earned by the insurers and claims payable to non-residents. 
Again, it may be necessary to calculate the insurance service charge ratio and apply this to premiums earned during 
each period. Insurance services provided to residents by non-resident insurers may be estimated by taking the ratio 
of estimated service charges to total premiums for exports of insurance services and applying this ratio to the total 
premiums paid to non-resident insurers. As before, the ratio should be based on a medium- to long-term period. 
If there is no export insurance industry in the compiling economy, the compiler should use insurance service 
charge ratios based on the domestic insurance industry. If the domestic insurance industry is very small or non-
existent, then the long-term relationship between premiums payable to non-resident insurers and claims receivable 
from non-resident insurers should be used to determine approximate service charges for imports of insurance 
services (debits). 
Alternatively, compilers in the countries supplying insurance services to the compiling economy could be 
contacted for information regarding service charges. 
For  reinsurance, exports of services (credit) are in principle estimated as the balance of all flows occurring 
between resident reinsurers and non-resident insurers. Imports of services (debit) are estimated as the balance of all 
flows occurring between resident insurers and non-resident reinsurers.  
Two features distinguish life insurance from other forms of insurance. The first is the length of time between the 
payment of premiums and the receipt of claims. The second is the certainty that a claim will occur. However, life 
insurance services may be estimated in the same ways as for non-life insurance services. An alternative, and 
sometimes more meaningful, estimate of the export of services of life insurance enterprises is to estimate an 
insurance service charge ratio by dividing the sum of operating costs and profits by premiums payable. This ratio 
would then be applied to premiums payable by non-residents to provide an estimate of insurance services. As with 
non-life insurance, the service charge ratio for life insurance services is more easily calculated for exports than for 
imports. Similar ratios, which could be obtained from the domestic life insurance industry or from compilers in 
other countries, could be used for imports. 
In practice, life insurance transactions between residents and non-residents tend to be relatively insignificant in 
many countries, and service charges tend to be a small proportion of premiums payable. Thus, it may be possible to 
ignore entirely the service element of life insurance services. 

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45 
of maintaining consistency with BPM5, the present 
Manual likewise excludes FISIM from international 
trade in financial services. However, countries that 
estimate FISIM attributable to external transactions for 
purposes of constructing national accounts are 
encouraged to disclose these estimates. Thus, financial