TIA Section A - NAIC SSAPs - SSAP 65 Flashcards
How are premium/liabilities recorded under Tail Coverage contracts with an indefinite period
💰The premium should be fully earned at inception
🧑🏻⚖️ The liabilities for unreported claims should be recognized at inception
How are premium/liabilities recorded under Tail Coverage contracts with a fixed period
🔒The premium should be earned over the term
🎦 Losses should be recorded when reported
Accounting action required of insurer if it provides tail coverage at no additional charge
Establish a policy reserve to ensure that premiums are not earned prematurely
Items that the insurer needs to disclose if there is a change in the key discount assumptions
🟣 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)
Accounting treatment of structured settlements in which the insurer is the owner and payee
🚫 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
Accounting treatment of structured settlements in which the claimant is the payee
➖Loss reserves can be reduced
🧾 The costs of the annuity is recorded as a paid loss
Difference between SAP and GAAP treatment of structured settlements when the claimant is the owner and payee but has not released the insurer
📍GAAP: the gain from the purchase of the annuity needs to be deferred
📍SAP: recognizes gain immediately
Disclosures necessary when entering into a structured settlement
🧻 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
Two requirements to qualify a contract as a “Long Term contract”
1️⃣3️⃣ Policy term greater or equal to 13 months
📰❌ Reporting entity can not cancel contract nor increase premium
UEPR for a Long Term contract is the maximum of what 3 tests
📑 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
Are loss reserves for high deductible policies Net or gross of the deductible?
🥅 Net (unless the deductible is deemed to be uncollectible)
Rules to determine non-admitted balances of recoverables from high deductible policies if the insurer does not hold collateral
Deductible recoveries that are over 90 days overdue are non-admitted
Rules to determine non-admitted balances of recoverables from high deductible policies if the insurer holds collateral
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
When do dividends to policyholders become liabilities
🗣When they are declared