# ASC 405-30-30: Liabilities — Insurance-Related Assessments — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/30/#30-initial-measurement) 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): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:4c411d998530b8ac9c69422ed2351a5a7220c488bf0db11fc8500834667d17fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/405/30/#30-initial-measurement) SEC content: no #### Estimating the Liability ##### [405-30-30-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:d77e87949b75a420f24aaac05077377788e0d5a46610c8e0a81a05dc91b6f620 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Entities subject to assessments may be able to obtain information to assist in estimating the total guaranty-fund cost or the following years' assessments, as appropriate, for an insolvency from entities such as the state guaranty fund associations, the National Organization of Life and Health Insurance Guaranty Associations, and the National Conference of Insurance Guaranty Funds. ##### [405-30-30-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:4161bbad6346dcf834b30b69f1cabed1b98e9cddd0815b8f1a1e6fccf9cf6066 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity need not be able to compute the exact amounts of the assessments or be formally notified of such assessments by a guaranty fund to make a reasonable estimate of its liability. Entities subject to assessments may have to make assumptions about future events, such as when the fund will incur costs and pay claims that will determine the amounts and the timing of assessments. ##### [405-30-30-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:c7209dda12210a710b3e7119365fa26325dc2cb3a3a7fd4504744a134170f5bf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The best available information about market share or premiums by state and premiums by line of business shall be used to estimate the amount of an insurance entity's future assessments. ##### [405-30-30-4](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:81e352f23b3f5b692986b85e6007566ba13a660f502bd6b0b6bb897fdb4a7855 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a noninsurance entity's assessments are based on premiums, it may be necessary to consider the amount of premium the self-insurer would have paid if it had insured its liability with an insurer. If a noninsurance entity's assessments are based on losses, it shall consider the losses that have been incurred by the entity when determining the liability. Most often, assessments that have an impact on noninsurance entities that self-insure workers' compensation obligations are for second-injury funds. Second-injury funds generally assess insurance entities and self-insurers based on paid losses. ##### [405-30-30-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:d43e81158166da5c5781bbf95327770f87c6b02764bd6473e9a29dcda906a7e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A noninsurance entity may develop an accrual for its second-injury liability based on any of the following: 1. a The ratio of the entity's prior period paid workers' compensation claims to aggregate workers' compensation claims in the state that was used as a basis for previous assessments 2. b Total fund assessments in prior periods 3. c Known changes in the current period to either the number of employees self-insured by the entity or the number of workers who are the subject of recoveries from the second-injury fund that might alter total fund assessments and the entity's proportion of the total fund assessments. ##### [405-30-30-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:f46330a13319e276f14ca6a07d0986249a10170129d6b2806d9fa9d6887211d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimates of loss-based assessments shall be consistent with estimates of the underlying [incurred losses](https://asc.understandingaccounting.org/glossary/i/#incurred-losses "Losses paid or unpaid for which the entity has become liable during a period.") and shall be developed based on enacted laws or regulations and expected assessment rates. ##### [405-30-30-7](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:70d08640ac5b044e3eb8d7a83f26b058afd82b9a0c09a28c47bb3b857a62f4e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimates of some insurance-related assessment liabilities may be difficult to derive. The development or determination of estimates is particularly difficult for guaranty-fund assessments because of uncertainties about the cost of the insolvency to the guaranty fund and the portion that will be recovered through assessment. Examples of uncertainties include the following: 1. a Limitations, as provided by statute, on the amount of individual contract liabilities that the guaranty fund will assume, that cause the guaranty fund associations' liability to be less than the amount by which the entity is insolvent 2. b Contract provisions (for example, credited rates) that may be modified at the time of the insolvency or alternative payout options that may be offered to contract holders that affect the level and payout of the guaranty fund's liability 3. c The extent and timing of available [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.") recoveries, which may be subject to significant uncertainties 4. d Alternative strategies for the liquidation of assets of the insolvent entity that affect the timing and level of assessments 5. e Certain liabilities of the insolvent insurer that may be particularly difficult to estimate (for example, asbestos or environmental liabilities). ##### [405-30-30-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:581d8088826f3b403a56b0c471649879e03ab317b87d5ccb1e41ae7c2c9ddd61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of the uncertainties surrounding some insurance-related assessments, the range of assessment liability may have to be reevaluated regularly during the assessment process. For some ranges, there may be amounts that appear to be better estimates than any other within the range. If this is the case, the liability recorded shall be based on the best estimate within the range. For ranges in which there is no such best estimate, the liability that should be recorded shall be based on the amount representing the minimum amount in the range. #### Present Value Measurement of the Obligation ##### [405-30-30-9](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:6613dbdfc72e2448a5d89cda8695545eb9ceecbfd16974e295d71e1c5f3689f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Current practice in the insurance industry is to allow, but not require (with limited exceptions, such as pensions and postretirement benefits), the discounting of liabilities to reflect the time value of money when the aggregate amount of the obligation and the amount and timing of the cash payments are fixed or reliably determinable for a particular liability. ##### [405-30-30-10](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:f51f0bdd8fe63073f46da5000bc8df5845fc5390671ca35568e1d07581c1d1d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, for assessments that meet those criteria, the liability may be recorded at its present value by discounting the estimated future cash flows at an appropriate interest rate. #### Asset for Premium Tax Offsets and Policy Surcharges ##### [405-30-30-11](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:108848b8b922df53ba14a09499a267972b33779d4d814b733480e9eaf3569f6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The asset recognized under paragraph [405-30-25-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-8) shall be measured based on current laws and projections of future premium collections or policy surcharges from [in-force policies](https://asc.understandingaccounting.org/glossary/i/#in-force-policies "Policies effective before a specified date that have not yet expired or been cancelled."). In determining the asset to be recorded, in-force policies do not include expected renewals of short-duration contracts but do include assumptions as to persistency rates for long-duration contracts. ##### [405-30-30-12](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:07eb4a854e63e41771cc571643e81af1a36842233c1b113c012d7caf62985c70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The time value of money need not be considered in the determination of the recorded amount of a potential recovery if the liability is not discounted. In instances in which the recovery period for an asset is substantially longer than the payout period for the liability, it may be appropriate to record the asset on a discounted basis regardless of whether the liability is discounted. ##### [405-30-30-13](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:32.244Z to 2026-09-10T00:14:32.244Z Record version: sha256:5c81ecde68e55e7724b244782e37dcba53d967c0f02ef0a7e36834c1f2ddc018 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The recognition of such assets related to prospective-premium-based assessments is limited to the amount of premium an entity has written or is [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.") and to the amounts recoverable over the life of the in-force policies. The expected premium tax offset or policy surcharge asset related to the accrual of prospective-premium-based assessments shall be based on and limited to the amount recoverable as a result of premiums the insurer has written or is obligated to write.