Accounting Standard Updates

12 Days of SSAP: Change in Terminology: Substantive vs. Nonsubstantive

Hot Take:

Hot Take

JLK Rosenberger is carrying on our holiday tradition of taking a new perspective on a holiday classic – the Twelve Days of Christmas. Rather than filling your head with turtle doves and gold rings, we are focusing on the latest changes to SSAP and how they will impact your insurance entity in 2023 and beyond.

In today’s installment, we summarize The Statutory Accounting Principles Working Group (SAPWG) decision to break from a long-standing terminology trend.

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Even though this change is about a year old, since it was adopted during the 2021 NAIC fall meeting, we still thought it is worth mentioning as it is a major change in traditional terminology that has been in place since the initiation of the APP manual in 2001. Some constituents wrestled with the depth of the meaning of “substantive” versus “nonsubstantive.” The new terms provide some closure to that concern. It reaches all insurance entities as far as future promulgations and activity within the SAPWG. It’s worth noting that all prior SAP promulgations and changes will not be retroactively changed for this new terminology.

This change results in revisions to the Preamble, the Table of Contents, Summary of Changes, and Appendix F, replacing the terms “substantive” and “nonsubstantive” with new terminology. Beginning Jan. 1, 2022, the phrase “new SAP concept” will reflect instances previously considered to be “substantive,” and the term “SAP clarification” will reflect instances previously identified as “nonsubstantive.”