TIA Section A - NAIC SSAPs - SSAP 65 Flashcards

1
Q

How are premium/liabilities recorded under Tail Coverage contracts with an indefinite period

A

💰The premium should be fully earned at inception

🧑🏻‍⚖️ The liabilities for unreported claims should be recognized at inception

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2
Q

How are premium/liabilities recorded under Tail Coverage contracts with a fixed period

A

🔒The premium should be earned over the term

🎦 Losses should be recorded when reported

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3
Q

Accounting action required of insurer if it provides tail coverage at no additional charge

A

Establish a policy reserve to ensure that premiums are not earned prematurely

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4
Q

Items that the insurer needs to disclose if there is a change in the key discount assumptions

A

🟣 Amount of the discounted reserves at the current rates and assumptions

⚪️ Amount of the discounted reserves at the prior rates and assumptions

🟢 Change in discounted liability due to change in interest rates and/or assumptions

🔵 Amount of the non/tabular discount, by line of businesses and reserve category

(excluding the current AY)

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5
Q

Accounting treatment of structured settlements in which the insurer is the owner and payee

A

🚫 No reduction to loss reserves

📄 The annuity is recorded as an “other than invested asset” at its present value

🎦 The income from the annuity is recorded as miscellaneous income

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6
Q

Accounting treatment of structured settlements in which the claimant is the payee

A

➖Loss reserves can be reduced

🧾 The costs of the annuity is recorded as a paid loss

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7
Q

Difference between SAP and GAAP treatment of structured settlements when the claimant is the owner and payee but has not released the insurer

A

📍GAAP: the gain from the purchase of the annuity needs to be deferred

📍SAP: recognizes gain immediately

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8
Q

Disclosures necessary when entering into a structured settlement

A

🧻 The amount of reserves which the company no longer needs to carry because it has purchased annuities with the claimant as payee

🚽 The extent to which it is continently liable for the liabilities

💩 If the aggregate value of annuities (with no release of liability) from a given life insurer > 1% of the surplus, it must disclose the name, location of the insurer and aggregate value of annuities

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9
Q

Two requirements to qualify a contract as a “Long Term contract”

A

1️⃣3️⃣ Policy term greater or equal to 13 months

📰❌ Reporting entity can not cancel contract nor increase premium

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10
Q

UEPR for a Long Term contract is the maximum of what 3 tests

A

📑 Management’s best estimate of the amounts refundable to the contract holders

📊 Gross premium* (projected future gross losses and expenses from unexpired term/ projected total gross losses and expenses)

📈 Projected future gross losses and expenses to be incurred during the unexpired term, minus the present value of future guarantees gross premiums

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11
Q

Are loss reserves for high deductible policies Net or gross of the deductible?

A

🥅 Net (unless the deductible is deemed to be uncollectible)

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12
Q

Rules to determine non-admitted balances of recoverables from high deductible policies if the insurer does not hold collateral

A

Deductible recoveries that are over 90 days overdue are non-admitted

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13
Q

Rules to determine non-admitted balances of recoverables from high deductible policies if the insurer holds collateral

A

10% of the deductible recoverable in excess of collateral is non-admitted. If amounts in excess of this 10% are deemed uncollectible, they should be non-admitted as well

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14
Q

When do dividends to policyholders become liabilities

A

🗣When they are declared

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