TIA Section C - Odomorik 22-23

Question 1

Answer 1

Question 2

Answer 2

• GAAP creates a DAC asset to defer the recognition of acquisition expenses, to match the recognition of earned premium.
• SAP does not allow deferring the expenses. Instead, all costs are expensed as incurred.
• Also under SAP, if the insurer enteres a reinsurance agreement that has a ceding commission that exceeds the acquisition costs, the insurer must create a liability to reflect the difference between the two.

Question 3

Answer 3

Under SAP, the commissions & acquisition costs do not need to be considered to the extent that they have already been expensed.

• GAAP: If a PDR exists, it is first netted from the DAC. If it completely eliminates the DAC, the excess should be recognized as the PDR liability
• SAP: Recognized as either a write-in liability or within the UEPR balance

Question 4

Answer 4

Question 5

Answer 5

Question 6

Answer 6

Question 7

Answer 7

Question 8

Answer 8

Question 9

Answer 9

Question 10

Answer 10

Question 11

Answer 11

Question 12

Answer 12

Question 13

Answer 13

Question 14

Answer 14

Question 15

Answer 15

Question 16

Answer 16

Question 17

Answer 17

Question 18

Answer 18

Question 19

Answer 19

Question 20

Answer 20

Question 21

Answer 21

Question 22

Answer 22

Question 23

Answer 23