Difference between revisions of "NAIC.SSAP-55"

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'''Reading''':  Statement of Statutory Accounting Principles 55, “'''Unpaid Claims, Losses and Loss Adjustment Expenses''',” paragraphs 1-6 and 11-19.
 
'''Reading''':  Statement of Statutory Accounting Principles 55, “'''Unpaid Claims, Losses and Loss Adjustment Expenses''',” paragraphs 1-6 and 11-19.
  
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'''Author''': National Association of Insurance Commissioners, Accounting Practices and Procedures Manual, 2022
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'''Author''': National Association of Insurance Commissioners, Accounting Practices and Procedures Manual
  
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&nbsp;&nbsp;[https://www.battleacts6us.ca/vanillaforum6us/categories/naic-ssap-55<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>]
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[https://battleacts.discourse.group/c/candidates-6u/naic-ssap-55/225<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>]
 +
[https://www.battleacts6us.ca/vanillaforum6us/categories/naic-ssap-55 ''&nbsp;&nbsp; (Or click here for Legacy Forum &ndash; no longer monitored)''</span>]
  
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This statement establishes statutory accounting principles for <u>recording liabilities</u> for unpaid losses and loss adjustment expenses for property and casualty insurance contracts.
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<span style="display: inline-block; background-color: blue; color: white; font-weight: bold; text-align: center; line-height: 50px; width: 50px; height: 50px; border-radius: 50%;">VIDEO</span> &rarr;
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[https://battleacts8.ca/6u/video/520_Recording_Liabilities_(v01).mp4 <span style="color: black; font-size: 12px; background-color: aqua; border: solid; border-width: 2px; border-radius: 10px; border-color: aqua; padding: 5px 10px 5px 10px; margin-top: 100px;">'''(5:00) &rarr; Unpaid Claim Estimates - General Overview'''</span>] &nbsp;&nbsp;
 +
([[Videos |Click here for all currently available videos.]])
 +
{| class='wikitable' style='background-color: navajowhite;
 +
|-
 +
|| '''BA Quick-Summary''': <span style="color: green;>'''Accounting Principles - Unpaid Loss & LAE'''</span>
 +
 
 +
* This statement establishes statutory accounting principles for '''recording liabilities for unpaid losses''' and loss adjustment expenses for property and casualty insurance contracts.
 +
 
 +
* It requires insurers to recognize these costs '''when an insured event happens''' and to establish liabilities for any unpaid claims.
 +
 
 +
* The guidance emphasizes the need for '''accurate estimates''' based on past data and current trends, and it requires '''detailed disclosures''' in financial statements to keep things transparent.
 +
 
 +
|}
  
 
==Study Tips==
 
==Study Tips==
  
−
The CAS syllabus citation for this article is confusing. The syllabus says this is a new reading but it actually isn't. The year of publication for the manual changes each year but the content generally does not. We will let you know if there is a major change.
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The year of publication for the manual changes each year but the content generally does not. We will let you know if there is a major change.
  
 
Spend 5 minutes max on this reading.
 
Spend 5 minutes max on this reading.
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[https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=NAIC&suffix=SSAP-55&section=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span>
 
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&nbsp;&nbsp;[https://www.battleacts6us.ca/vanillaforum6us/categories/naic-ssap-55<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>]
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&nbsp;&nbsp;[https://battleacts.discourse.group/c/candidates-6u/naic-ssap-55/225<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>]
  
 
==In Plain English!==
 
==In Plain English!==
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 +
=== Things You Should Learn ===
  
 
Loss Adjustment Expenses (LAE) are classified into '''2 categories''':
 
Loss Adjustment Expenses (LAE) are classified into '''2 categories''':
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:: &nbsp;&nbsp; - attorney fees
 
:: &nbsp;&nbsp; - attorney fees
  
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There was a question on this topic from an old SOA exam. See ''[https://www.battleacts6us.ca/vanillaforum6us/discussion/293/categorizing-expenses this forum discussion]''.
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There was a question on this topic from an old SOA exam. See ''[https://battleacts.discourse.group/t/categorizing-expenses/2677 this forum discussion]''.
 +
 
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=== Lower Probability Exam Items ===
 +
 
 +
{| class="wikitable"
 +
! Topic
 +
! What students should know
 +
! Why it’s worth knowing
 +
|-
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| '''Reserves are generally not discounted'''
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| Unpaid claims / loss reserves are '''not discounted''' unless another SSAP explicitly allows it (e.g., SSAP 54R, 65).
 +
| Common conceptual multiple-choice trap (discounted vs. undiscounted).
 +
|-
 +
| '''Booking within a range = best estimate'''
 +
| If management develops a reasonable range of reserve estimates, they must record their '''best estimate within the range'''. No explicit PAD is required.
 +
| Aligns with frequently tested accounting theory concepts.
 +
|-
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| '''Midpoint rule (rare case)'''
 +
| Only if '''no value in the range is more likely than another''', the '''midpoint must be booked'''. The guidance says this situation is rare.
 +
| Very “rule-based” detail that exam writers like to test.
 +
|}
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[https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=NAIC&suffix=SSAP-55&section=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span>
 
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Latest revision as of 15:51, 27 January 2026

Reading: Statement of Statutory Accounting Principles 55, “Unpaid Claims, Losses and Loss Adjustment Expenses,” paragraphs 1-6 and 11-19.

Author: National Association of Insurance Commissioners, Accounting Practices and Procedures Manual

Forum    (Or click here for Legacy Forum – no longer monitored)

VIDEO → (5:00) → Unpaid Claim Estimates - General Overview    (Click here for all currently available videos.)

BA Quick-Summary: Accounting Principles - Unpaid Loss & LAE
  • This statement establishes statutory accounting principles for recording liabilities for unpaid losses and loss adjustment expenses for property and casualty insurance contracts.
  • It requires insurers to recognize these costs when an insured event happens and to establish liabilities for any unpaid claims.
  • The guidance emphasizes the need for accurate estimates based on past data and current trends, and it requires detailed disclosures in financial statements to keep things transparent.

Study Tips

The year of publication for the manual changes each year but the content generally does not. We will let you know if there is a major change.

Spend 5 minutes max on this reading.

BattleTable

  • this reading has not been tested on any exam from the year 2012 to Fall 2019 when the exams stopped being published.
reference part (a) part (b) part (c) part (d)
no prior questions

Full BattleQuiz You must be logged in or this will not work.

  Forum

In Plain English!

Things You Should Learn

Loss Adjustment Expenses (LAE) are classified into 2 categories:

  • DCC (Defense & Cost Containment): covers defense, litigation, and medical cost containment expenses, whether internal or external
  • Examples:
   - litigation management
   - rehab nurses
  • A&O (Adjusting & Other): expenses other than DCC
  • Examples:
   - adjuster fees
   - attorney fees

There was a question on this topic from an old SOA exam. See this forum discussion.

Lower Probability Exam Items

Topic What students should know Why it’s worth knowing
Reserves are generally not discounted Unpaid claims / loss reserves are not discounted unless another SSAP explicitly allows it (e.g., SSAP 54R, 65). Common conceptual multiple-choice trap (discounted vs. undiscounted).
Booking within a range = best estimate If management develops a reasonable range of reserve estimates, they must record their best estimate within the range. No explicit PAD is required. Aligns with frequently tested accounting theory concepts.
Midpoint rule (rare case) Only if no value in the range is more likely than another, the midpoint must be booked. The guidance says this situation is rare. Very “rule-based” detail that exam writers like to test.


Full BattleQuiz You must be logged in or this will not work.

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