# ASC 405-30-25: Liabilities — Insurance-Related Assessments — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/30/#25-recognition) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:35a21475052ae1f4c1556917b08ce270264b4eb9b15779a9b6584e54c3f422d3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/30/#25-recognition) SEC content: no #### Reporting Liabilities ##### [405-30-25-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:4b9f7865795685db142b3431f61ebdfc632c9682124f6b8cc606a6b404a94880 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities subject to assessments shall recognize liabilities for insurance-related assessments when all of the following conditions are met: 1. a Probability of assessment. An assessment has been imposed or information available before the financial statements are issued or are available to be issued (as discussed in Section 855-10-25) indicates it is probable that an assessment will be imposed. 2. b Obligating event. The event obligating an entity to pay (underlying cause of) an imposed or probable assessment has occurred on or before the date of the financial statements. 3. c Ability to reasonably estimate. The amount of the assessment can be reasonably estimated. See Examples 1 through 3 (paragraphs [405-30-55-1 through 55-15](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-1) ) for illustrations of the computation of assessment liabilities. ##### [405-30-25-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:3866355760c1e97cfdb1f84952e6666be7a8c8439703ceb5836a4f186f2edc99 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Premium-based guaranty-fund assessments, except those that are prefunded, are presumed probable when a formal determination of insolvency occurs, and presumed not probable before a formal determination of insolvency. For purposes of this Subtopic, a formal determination of insolvency occurs when an entity meets a state's (ordinarily the state of domicile of the insolvent insurer) statutory definition of an insolvent insurer. In most states, the entity must be declared to be financially insolvent by a court of competent jurisdiction. In some states, there must also be a final order of liquidation. ##### [405-30-25-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:65256ffce3ea46e07e2d3b55d12d7b53cac82e080deee063c4e2ea1dfba43f93 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Prefunded guaranty-fund assessments and premium-based administrative-type assessments, as defined in paragraph [405-30-05-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-3), are presumed probable when the premiums on which the assessments are expected to be based are written. Loss-based administrative-type and second-injury fund assessments are presumed probable when the losses on which the assessments are expected to be based are incurred. ##### [405-30-25-4](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:671d82e9e299ad2627b38300fd0d456bf5f860d401f5e8dd2393d5718a824d6f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of the fundamental differences in how assessment mechanisms operate, the event that makes an assessment probable (for example, an insolvency) may not be the event that obligates an entity. The following defines the event that obligates an entity to pay an assessment for each kind of assessment identified in this Subtopic: 1. a For premium-based assessments, the event that obligates the entity is generally writing the premiums or becoming [obligated to write](https://asc.understandingaccounting.org/glossary/o/#obligated-to-write "A circumstance in which an entity has no discretion to cancel a policy because of legal obligation under state statute, contract terms, or regulatory practice and is required to offer or issue insurance policies for a period in the future.") or renew (such as multiple-year, noncancelable policies) the premiums on which the assessments are expected to be based. Some states, through law or regulatory practice, provide that an insurance entity cannot avoid paying a particular assessment even if that insurance entity reduces its premium writing in the future. In such circumstances, the event that obligates the entity is a formal determination of insolvency or similar triggering event. For example, in certain states, an insurance entity may remain liable for assessments even though the insurance entity discontinues the writing of premiums. In this circumstance, the underlying cause of the liability is not the writing of the premium, but the insolvency. Regulatory practice would be determined based on the stated intentions or prior history of the insurance regulators. 2. b For loss-based assessments, the event that obligates an entity is an entity's incurring the losses on which the assessments are expected to be based. ##### [405-30-25-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:11abafc5c6a360412796341cb3200467b396286d215b3d5d654d562c2b7f545e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. One of the conditions (see paragraph [450-20-25-2(b)](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-2)) for recognition of a liability is that the amount can be reasonably estimated. Paragraph [450-20-25-5](https://asc.understandingaccounting.org/asc/450/20/#450-20-25-5) provides that some amount of loss can be reasonably estimated when available information indicates that the estimated amount of the loss is within a range of amounts. Paragraph [450-20-30-1](https://asc.understandingaccounting.org/asc/450/20/#450-20-30-1) explains that, if no amount within the range is a better estimate than any other amount, the minimum amount in the range should be accrued. #### Applying the Recognition Criteria ##### [405-30-25-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:b35fae3faf1e838bcbd2454ab0189caa7e285620e5b9db133e10b491236e339f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Application of the recognition criteria in paragraphs [405-30-25-1 through 25-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-1) to the methods used to address guaranty-fund assessments and other insurance-related assessments, as described in paragraphs [405-30-05-3 through 05-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-3) , is as follows: 1. a Retrospective-premium-based guaranty-fund assessments. An assessment is probable of being imposed when a formal determination of insolvency occurs. At that time, the premium that obligates the entity for the assessment liability has already been written. Accordingly, an entity that has the ability to reasonably estimate the amount of the assessment shall recognize a liability for the entire amount of future assessments related to a particular insolvency when a formal determination of insolvency is rendered. 2. b Prospective-premium-based guaranty-fund assessments. The event that obligates the entity for the assessment liability generally is the writing of, or becoming obligated to write or renew, the premiums on which the expected future assessments are to be based (for example, multiple-year contracts under which an insurance entity has no discretion to avoid writing future premiums). Therefore, the event that obligates the entity generally will not have occurred at the time of the insolvency. Law or regulatory practice affects the event that obligates the entity in either of the following ways: 1. 1 In states that, through law or regulatory practice, provide that an entity cannot avoid paying a particular assessment in the future (even if the entity reduces premium writings in the future), the event that obligates the entity is a formal determination of insolvency or a similar event. An entity that has the ability to reasonably estimate the amount of the assessment shall recognize a liability for the entire amount of future assessments that cannot be avoided related to a particular insolvency when a formal determination of insolvency occurs. 2. 2 In states without such a law or regulatory practice, the event that obligates the entity is the writing of, or becoming obligated to write, the premiums on which the expected future assessments are to be based. An entity that has the ability to reasonably estimate the amount of the assessments shall recognize a liability when the related premiums are written or when the entity becomes obligated to write the premiums. 3. c Prefunded-premium-based guaranty-fund assessments. A liability for an assessment arises when premiums are written. Accordingly, an entity that has the ability to reasonably estimate the amount of the assessment shall recognize a liability as the related premiums are written. 4. d Other premium-based assessments. Other premium-based assessments, as described in paragraph [405-30-05-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-5), would be accounted for in the same manner as prefunded-premium-based guaranty-fund assessments. 5. e Loss-based assessments. An assessment is probable of being asserted when the loss occurs. The obligating event of the assessment also has occurred when the loss occurs. Accordingly, an entity that has the ability to reasonably estimate the amount of the assessment shall recognize a liability as the related loss is incurred. ##### [405-30-25-7](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:f7fda36aa8f851f68805dcfc5bb33f3a23f01f1231d79ca13842578ea2a3081c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Administrative-type assessments are generally expensed in the period assessed. #### Asset for Premium Tax Offsets and Policy Surcharges ##### [405-30-25-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:e75b30d950d07ff81d394b7b0c70fab6ec39be603efbe4d583810c6f638bc6eb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When it is probable that a paid or accrued assessment will result in an amount that is recoverable from [premium tax offsets](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states.") or policy surcharges, an asset shall be recognized for that recovery. ##### [405-30-25-9](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:782c5d372ff98c8b15dc33f61e15da646f9563eddbceed7e6c2cdf834688dda5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For retrospective-premium-based assessments, to the extent that it is probable that paid or accrued assessments will result in a recoverable amount in a future period from business currently in force considering appropriate persistency rates for long-duration contracts (see paragraph [405-30-30-11](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-11)), an asset shall be recognized at the time the liability is recorded. ##### [405-30-25-10](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:9076338f21299560ed186ae447a1ae7f2cd23ff27e809901338ef78c9b823a98 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An asset shall not be established for paid or accrued assessments that are recoverable through future premium rate structures. ##### [405-30-25-11](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:28.313Z to 2026-09-10T00:14:28.313Z Record version: sha256:457c184cb13488b747629acbd2eeeee8c282dc9d4102cddcd3360a5e65dc48bb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Policy surcharges that are required as a pass-through to the state or other regulatory bodies shall be accounted for in a manner such that amounts collected or receivable are not recorded as revenues and amounts due or paid are not expensed (meaning, similar to accounting for sales tax).