On June 15, 2020, the SAPWG revisited the original INT 20-08 to finalize decisions on how to handle accounting for the unique situation where COVID-19-related premium refunds, rate reductions, and policyholder dividends occurred as a result of voluntary or regulatory-directed refunds. SAPWG reached a majority consensus to treat refunds as direct reductions to premium. Insurance companies providing refunds through policyholder dividends will record a liability upon declaration by the board of directors. Disclosures of all COVID-19–related payments are required to be provided as an unusual or infrequent item by category under guidance in SSAP No. 24, Discontinued Operations and Unusual or Infrequent Items.
Certain interested parties with specific methodologies and desires to treat the refunds as an underwriting expense were not granted such an exception. Subsequently, the NAIC E-Committee sent the original SAPWG decision to the Accounting Practices and Procedures Task Force (APPTF) to find a workable option that would satisfy all interested parties.
Due to the diversity of accounting that various jurisdictions approved for the COVID-19 premium refunds, on July 22, the APPTF approved a limited-time exception to the originally approved guidance, allowing underwriting expense reporting that meets the following criteria:
- Property and casualty insurance policy
- A manual rate filing or policy endorsement was filed or issued prior to June 15
Disclosure requirements under this limited-time exception will require reporting in the regulatory statements as if this were a permitted practice.
The revised INT reiterates that this promulgation does not alter or impact jurisdictional premium taxes and leaves all premium tax decisions to the individual state authorities.
Interprets the following SSAPs:
SSAP No. 5R—Liabilities, Contingencies and Impairments of Assets
SSAP No. 24—Discontinued Operations and Unusual or Infrequent Items
SSAP No. 53—Property Casualty Contracts—Premiums
SSAP No. 54R—Individual and Group Accident and Health Contracts
SSAP No. 65—Property and Casualty Contracts
SSAP No. 66—Retrospectively Rated Contracts
INT 20-08 will automatically expire on January 1, 2021.
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