Difference between revisions of "NAIC.SSAP-53"
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| − | + | '''Reading''': Statement of Statutory Accounting Principles 53, “'''Property Casualty Contracts—Premiums''',” paragraphs 1-18. | |
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| + | '''Author''': National Association of Insurance Commissioners, Accounting Practices and Procedures Manual | ||
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| + | [https://www.battleacts6us.ca/vanillaforum6us/categories/naic-ssap-53<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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| + | {| class='wikitable' style='background-color: navajowhite; | ||
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| + | || '''BA Quick-Summary''': <span style="color: green;>'''Accounting Principles - Contracts/Premiums'''</span> | ||
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| + | * This statement establishes general statutory accounting principles for the '''recording''' and '''recognition of premium revenue''' for property and casualty contracts. It details the methods for accounting for various types of premiums such as: | ||
| + | :: → ''written premiums, earned but unbilled premiums, and advance premiums'', | ||
| + | * and sets forth the requirements for establishing liabilities like the unearned premium reserve and premium deficiency reserve. | ||
| + | |} | ||
| + | ==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. | |
| + | I could barely find anything worthy of an exam question in this reading but I didn't want to leave the wiki page completely blank so: '''''2 BattleCards, 10 minutes max''''' | ||
==BattleTable== | ==BattleTable== | ||
| − | + | * ''this reading has not been tested on any exam from the year 2012 to Fall 2019 when the exams stopped being published.'' | |
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| − | | | + | || ''no prior questions'' |
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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-53§ion=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> | ||
| + | |||
[https://www.battleacts6us.ca/vanillaforum6us/categories/naic-ssap-53<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-53<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!== | ||
| + | '''Earned But Unbilled Premium''' ''(EBUB)'' is an <u>estimate</u> of audit premium for WC: | ||
| + | * written/earned premium is <u>adjusted</u> by the EBUB amount | ||
| + | * after policy expiration, an audit is performed and <u>EBUB is adjusted</u> by the appropriate amount | ||
| + | * EBUB is then immediately <u>recognized</u> in the financial statements | ||
| − | + | A '''Premium Deficiency Reserve''' ''(PDR)'' is a <u>liability</u> equal to the amount by which future outflows <u>exceed</u> future inflows | |
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| + | * outflows include: <span style="color: red;">losses, loss adjustment expenses, commissions and other acquisition costs, maintenance costs</span> (4 items) | ||
| + | * inflows include: <span style="color: green;">recorded unearned premium reserve, future installment premiums on existing policies</span> (2 items) | ||
| − | + | ''(The PDR is essentially a reserve for future claims corresponding to the the unearned portion of existing policies. This is in contrast to the "normal" claims liability which relates to covered events that have already occurred.)'' | |
| + | According to paragraph 17 in SSAP-53: | ||
| − | + | * ''When the anticipated losses, loss adjustment expenses, commissions and other acquisition costs, and maintenance costs <u>exceed</u> the recorded unearned premium reserve, and any future installment premiums on existing policies, a '''premium deficiency reserve''' shall be recognized <u>by recording</u> an additional liability for the deficiency, with a corresponding charge to operations. | |
| − | == | + | [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=NAIC&suffix=SSAP-53§ion=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> |
Latest revision as of 18:13, 25 July 2024
Reading: Statement of Statutory Accounting Principles 53, “Property Casualty Contracts—Premiums,” paragraphs 1-18.
Author: National Association of Insurance Commissioners, Accounting Practices and Procedures Manual
BA Quick-Summary: Accounting Principles - Contracts/Premiums
|
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.
I could barely find anything worthy of an exam question in this reading but I didn't want to leave the wiki page completely blank so: 2 BattleCards, 10 minutes max
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.
In Plain English!
Earned But Unbilled Premium (EBUB) is an estimate of audit premium for WC:
- written/earned premium is adjusted by the EBUB amount
- after policy expiration, an audit is performed and EBUB is adjusted by the appropriate amount
- EBUB is then immediately recognized in the financial statements
A Premium Deficiency Reserve (PDR) is a liability equal to the amount by which future outflows exceed future inflows
- outflows include: losses, loss adjustment expenses, commissions and other acquisition costs, maintenance costs (4 items)
- inflows include: recorded unearned premium reserve, future installment premiums on existing policies (2 items)
(The PDR is essentially a reserve for future claims corresponding to the the unearned portion of existing policies. This is in contrast to the "normal" claims liability which relates to covered events that have already occurred.)
According to paragraph 17 in SSAP-53:
- When the anticipated losses, loss adjustment expenses, commissions and other acquisition costs, and maintenance costs exceed the recorded unearned premium reserve, and any future installment premiums on existing policies, a premium deficiency reserve shall be recognized by recording an additional liability for the deficiency, with a corresponding charge to operations.
Full BattleQuiz You must be logged in or this will not work.
