{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/405/30/#05-overview-and-background","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"405","topic_title":"Liabilities","subtopic":"405-30","subtopic_title":"Insurance-Related Assessments","section":{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"405-30-05-1","para":"05-1","html":"
Insurance entities as well as noninsurance entities are subject to a variety of assessments related to insurance activities, including those by state guaranty funds and workers' compensation second-injury funds. Some entities may be subject to insurance-related assessments because they self-insure against loss or liability. This Subtopic provides guidance on accounting for insurance-related assessments. The annual fee imposed on health insurers by the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (the Acts) is not considered an insurance-related assessment. The accounting for the Acts' fee is addressed in Subtopic 720-50.
","snippet":"Insurance entities as well as noninsurance entities are subject to a variety of assessments related to insurance activities, including those by state guaranty funds and workers' compensation second-injury funds. Some ent…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5f2593e713bdb5cdc70288e190dfbb2b1e6a407321fc896f9a8adaad99bc66a9","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ba132c04467d8386adaa4df1c3ce5c72fcbafed5a1df7af4f7159736da0e37d3","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}},{"block":null,"heading":"State Guaranty Funds","paragraphs":[{"citation":"405-30-05-2","para":"05-2","html":"
States have enacted legislation establishing guaranty funds. The state guaranty funds assess entities licensed to sell insurance in the state to provide for the payment of covered claims or to meet other insurance obligations—subject to prescribed limits—of insolvent insurance entities. The assessments are generally based on premium volume for certain covered lines of business. Most state guaranty funds assess entities for costs related to a particular insolvency after the insolvency occurs. At least one state, however, assesses entities before insolvencies.
","snippet":"States have enacted legislation establishing guaranty funds. The state guaranty funds assess entities licensed to sell insurance in the state to provide for the payment of covered claims or to meet other insurance obliga…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:faf64a69824e3ba3c91fd51ffd4569e9ab133a707725eafdef93cbdb77be82e1","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}},{"citation":"405-30-05-3","para":"05-3","html":"
State guaranty funds use a variety of methods for assessing entities. This Subtopic identifies the following four primary methods of guaranty-fund assessments:
  1. a
    Retrospective-premium-based assessments. Guaranty funds covering benefit payments of insolvent life, annuity, and health insurance entities typically assess entities based on premiums written or received in one or more years before the year of insolvency. Assessments in any year are generally limited to an established percentage of an entity's average premiums for the three years preceding the insolvency. Assessments for a given insolvency may take place over several years.
  2. b
    Prospective-premium-based assessments. Guaranty funds covering claims of insolvent property and casualty insurance entities typically assess entities based on premiums written in one or more years after the insolvency. Assessments in any year are generally limited to an established percentage of an entity's premiums written or received for the year preceding the assessment. Assessments for a given insolvency may take place over several years.
  3. c
    Prefunded-premium-based assessments. At least one state uses this kind of assessment to cover claims of insolvent property and casualty insurance entities. This kind of assessment is intended to prefund the costs of future insolvencies. Assessments are imposed before any particular insolvency and are based on the current level of written premiums. Rates to be applied to future premiums are adjusted as necessary.
  4. d
    Administrative-type assessments. These assessments are typically a flat (annual) amount per entity to fund operations of the guaranty association, regardless of the existence of an insolvency.
","snippet":"State guaranty funds use a variety of methods for assessing entities. This Subtopic identifies the following four primary methods of guaranty-fund assessments:\n(a) Retrospective-premium-based assessments. Guaranty funds …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5552c32756d6ed4d94b5db52a93fa818c2498776d248e5342f39d8e32f72e6e3","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}},{"citation":"405-30-05-4","para":"05-4","html":"
State laws often allow for recoveries of guaranty-fund assessments by entities subject to assessments through such mechanisms as premium tax offsets, policy surcharges, and future premium rate structures. The policy surcharges referred to in this Subtopic are those surcharges that are intended to provide an opportunity for assessed entities to recover some or all of the amounts assessed over a period of time.
","snippet":"State laws often allow for recoveries of guaranty-fund assessments by entities subject to assessments through such mechanisms as premium tax offsets, policy surcharges, and future premium rate structures. The policy surc…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4c6c4576272a885575b26cac4211c183a071d9056f0b8b65486ca01e6e5fc440","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b87778ba3493ace754f3f1a014cbc3a1dd2b2ec9b5d2b0b55579dfce74ae27e4","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}},{"block":null,"heading":"Other Insurance-Related Assessments","paragraphs":[{"citation":"405-30-05-5","para":"05-5","html":"
Entities are subject to a variety of other insurance-related assessments. Many states and a number of local governmental units have established other funds supported by assessments. The two most prevalent uses for such assessments are as follows:
  1. a
    To fund operating expenses of state insurance regulatory bodies (for example, the state insurance department or workers' compensation board)
  2. b
    To fund second-injury funds, which provide reimbursement to insurance carriers or employers for workers' compensation claims when the cost of a second injury combined with a prior accident or disability is greater than what the second accident alone would have produced. The employer of an injured or handicapped worker is responsible only for the workers' compensation benefit for the most recent injury; the second-injury fund would cover the cost of any additional benefits for aggravation of a prior condition or injury. The intent of the fund is to help insure that employers are not made to suffer a greater monetary loss or increased insurance costs because of hiring previously injured or handicapped employees.
","snippet":"Entities are subject to a variety of other insurance-related assessments. Many states and a number of local governmental units have established other funds supported by assessments. The two most prevalent uses for such a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b1304c0fdfe3029e0f73679c62ec900d36e9f6581ee04f5d00d13d13ed6cc314","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}},{"citation":"405-30-05-6","para":"05-6","html":"
The primary methods used to assess for these other insurance-related assessments are the following:
  1. a
    Premium-based. The assessing entity imposes the assessment based on the entity's written premiums. The assessing entity may be at the state, county, municipality, or other such level. The base year of premiums is generally either the current year or the year preceding the assessment.
  2. b
    Loss-based. The assessing entity imposes the assessment based on the entity's incurred losses or paid losses in relation to that amount for all entities subject to that assessment in the particular jurisdiction.
","snippet":"The primary methods used to assess for these other insurance-related assessments are the following:\n(a) Premium-based. The assessing entity imposes the assessment based on the entity's written premiums. The assessing ent…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8b033e43f1c7bf219f5b34d705460e7077660a6194eb7b5736f7d617fa0cf098","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b3b26cd614a832e64405fb1cb2079c1386681db50da32b32a708675e2226fb56","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3d3815466f5e5d5777787f745cfc24011b7336efe3d75b5d84177b28986b8fa5","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3d3815466f5e5d5777787f745cfc24011b7336efe3d75b5d84177b28986b8fa5","downloaded_from":"2026-09-10T00:14:16.426Z","last_downloaded_at":"2026-09-10T00:14:16.426Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482629","source_sha256":"ae75d6f1d0a70d48ec1fc58b7bfe18e5a389807ae1d7034e65f37d20dae37134"}}