{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/405/30/#55-implementation-guidance-and-illustrations","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":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"405-30-55-1","para":"55-1","html":"
This Example illustrates application of the recognition and measurement guidance in this Subtopic to a prospective-premium-based assessment. This kind of assessment is considered prospective because the assessment relates to premium written after the insolvency. As a result of insolvencies in prior years, ABC Property & Liability Insurance Company (ABC) expects to be assessed in the future by the guaranty fund in a state where it writes premiums. Any such assessments will be limited to 2 percent of premium writings in the prior year and are recoverable through premium tax offsets on a ratable basis over the 5-year period following the year of each assessment.
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Although it does not expect to do so, ABC is free to cease writing the lines of business that are subject to the guaranty-fund assessments.
","snippet":"Although it does not expect to do so, ABC is free to cease writing the lines of business that are subject to the guaranty-fund assessments.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b8ea4f5365ab7c12b11ce1e234f59d8051d2cf4aa38d9ed6aa7245804a1f8343","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-3","para":"55-3","html":"
As of December 31, 19X0, ABC has neither paid nor received a notice of an assessment related to the insolvencies. Based on communications from the state guaranty association, ABC expects to receive an assessment in 19X1, which is allocated among entities based on 19X0 market share, for at least 1 percent of 19X0 premiums that are subject to the assessment. A best estimate cannot be determined, and no amount within the range of estimates (meaning, from 1 to 2 percent of 19X0 premiums) is a better estimate than any other amount, therefore the minimum amount in the range shall be accrued.
","snippet":"As of December 31, 19X0, ABC has neither paid nor received a notice of an assessment related to the insolvencies. Based on communications from the state guaranty association, ABC expects to receive an assessment in 19X1,…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a4f7799704535e13c9e3c8e05f8bbcd355acbb5b9261b6444d0a3ff9b9bd407d","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-4","para":"55-4","html":"
As of December 31, 19X0, ABC should recognize a liability equal to 1 percent of the premiums written in 19X0 that are subject to the assessment. No additional liability should be recognized, and no asset related to the premium tax offset should be recognized. Disclosure of the loss contingency of up to an additional 1 percent of the subject premiums should be considered.
","snippet":"As of December 31, 19X0, ABC should recognize a liability equal to 1 percent of the premiums written in 19X0 that are subject to the assessment. No additional liability should be recognized, and no asset related to the p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6bf0ba30de2bd3cd2bec74ed2cc3adcabbfee87e216ab9e0cc582891454d1db0","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-5","para":"55-5","html":"
ABC would recognize a liability only for those future assessments it is obligated to pay as a result of the premiums written. Because ABC is not obligated to write any future premiums, its liability is limited to that related to premiums written in 19X0. Because no amount within the range of estimates is a better estimate than any other amount, the minimum amount in the range is accrued. Further, because the premium tax offset is realizable only on business that will be written in the future (that is, 19X2 and subsequent years), no asset or receivable is recognized as of December 31, 19X0.
","snippet":"ABC would recognize a liability only for those future assessments it is obligated to pay as a result of the premiums written. Because ABC is not obligated to write any future premiums, its liability is limited to that re…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ae79943577373e60c5af65944c6a82060311712f306ebdd5a3026481fd4a2af","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-6","para":"55-6","html":"
This Example illustrates application of the recognition and measurement guidance in this Subtopic to a retrospective-premium-based assessment. As a result of an insolvency that occurred during 19X0, DEF Life and Health Insurance Company (DEF) expects to be assessed in the future by the guaranty fund in a state where it has written business. Any such assessment will be based on DEF's average market share, determined based on premiums that are subject to the assessment for the three years before the insolvency, and limited to 2 percent of the average annual subject premiums for the three years before the insolvency. Further, such assessments are recoverable through premium tax offsets over the five-year period following the year of payment for each assessment.
","snippet":"This Example illustrates application of the recognition and measurement guidance in this Subtopic to a retrospective-premium-based assessment. As a result of an insolvency that occurred during 19X0, DEF Life and Health I…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05b5b2106eeed3be8810501ff509542959a694e6c4cddcf4193e55d036e5eff8","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-7","para":"55-7","html":"
As of December 31, 19X0, DEF has not paid or received a notice of an assessment related to the insolvency. Based on initial input from the National Organization of Life and Health Insurance Guaranty Associations and experience with other insolvencies, DEF assumes that the first assessment will not be made until 19X3 and that it will take three to five annual assessments for the guaranty fund to be able to meet its obligations. Based on the estimated nationwide cost of the insolvency and the distribution of the insolvent entity's business, DEF estimates that its assessment will be at least 1 percent of the average annual premiums that are subject to the assessment. No amount within the range of estimates (meaning, from 1 to 2 percent of the average annual premiums for 3 to 5 years) is a better estimate than any other amount, therefore the minimum amount in the range shall be accrued.
","snippet":"As of December 31, 19X0, DEF has not paid or received a notice of an assessment related to the insolvency. Based on initial input from the National Organization of Life and Health Insurance Guaranty Associations and expe…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7a62c80adc3436aa8c44cdb392193fafeeeb2fe0394220c4b7ab51113232c258","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-8","para":"55-8","html":"
As of December 31, 19X0, DEF should recognize a liability for 3 years of assessments at 1 percent of the average annual premiums that are subject to the assessment (that is, the assessments expected in 19X3, 19X4, and 19X5). Disclosure of the loss contingency for additional assessments (meaning, in 19X6 and 19X7) or assessment of greater than 1 percent of the average annual premiums that are subject to the assessment should be considered. An asset related to premium tax offsets that are available on accrued assessments would be recorded provided there were sufficient premium taxes based on business in force at December 31, 19X0 (with assumed levels of policy retention), to allow realization of the asset.
","snippet":"As of December 31, 19X0, DEF should recognize a liability for 3 years of assessments at 1 percent of the average annual premiums that are subject to the assessment (that is, the assessments expected in 19X3, 19X4, and 19…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d7f0735eb7db43963c26dfcd360471988bfba89bf1d8cbbe1cd291eaf55efeaf","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-9","para":"55-9","html":"
The resulting recognized liability and asset are as follows (shown on both a discounted and undiscounted basis, based on paragraphs
405-30-30-9 through 30-12
, discounting is optional), assuming average annual subject premiums of $100,000 for the 3 years before the insolvency.
","snippet":"The resulting recognized liability and asset are as follows (shown on both a discounted and undiscounted basis, based on paragraphs 405-30-30-9 through 30-12, discounting is optional), assuming average annual subject pre…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9cc4c9a68a2044e5e01888bdf64b627eb428f895aa920907d3b5034f84cce5d4","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-10","para":"55-10","html":"
DEF would record a liability for all future assessments related to the insolvency. Because no amount within the range of estimates (meaning, from 1 to 2 percent of the average annual premiums for 3 to 5 years) is a better estimate than any other amount, the minimum amount in the range (meaning, 1 percent per year for 3 years of assessments) is accrued.
","snippet":"DEF would record a liability for all future assessments related to the insolvency. Because no amount within the range of estimates (meaning, from 1 to 2 percent of the average annual premiums for 3 to 5 years) is a bette…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f098ab1a49b36e788a7102988b470be6bcc4567bd7bbf09f49bacaf5d926f380","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-11","para":"55-11","html":"
Since it is assumed that based on the anticipated levels of policy retention from the business in force at December 31, 19X0, there will be sufficient premium to realize the premium tax offset, the premium tax offset is recorded.
","snippet":"Since it is assumed that based on the anticipated levels of policy retention from the business in force at December 31, 19X0, there will be sufficient premium to realize the premium tax offset, the premium tax offset is …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:27025bd1482058c2aa329a1bbd7e5e24864e52a4516df14f0dd708e0b41fc880","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-12","para":"55-12","html":"
This Example illustrates application of the recognition and measurement guidance in this Subtopic to a loss-based assessment. GHI Industrial Company (GHI) is self-insured for workers' compensation and therefore participates in the second injury fund in the state where it conducts operations. GHI is entitled to recover from the fund some or all of the indemnity claims for previously injured workers. GHI is also subject to annual assessments (maximum of 1 percent per year) on indemnity claims paid each year.
","snippet":"This Example illustrates application of the recognition and measurement guidance in this Subtopic to a loss-based assessment. GHI Industrial Company (GHI) is self-insured for workers' compensation and therefore participa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d78bbe52798ebdf8c2408b955489947fc5cbde45abee16ac3820f1b59a77ff7","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-13","para":"55-13","html":"
Assessment rates have been climbing steadily, from 0.6 percent 5 years previous to 0.75 percent in 19X0.
","snippet":"Assessment rates have been climbing steadily, from 0.6 percent 5 years previous to 0.75 percent in 19X0.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:51c87ac9020645eb109e2b78ca4a1457214b92bf3f729e625d84aed702702233","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-14","para":"55-14","html":"
As of December 31, 19X0, GHI should have an assessment liability recognized for 0.75 percent of its liability for the payment of future indemnity claims, unless there was information to support the assessment rate being reduced or the assessments being eliminated in the future. Disclosure of the loss contingency of up to an additional 0.25 percent of the liability for the payment of future indemnity claims should be considered.
","snippet":"As of December 31, 19X0, GHI should have an assessment liability recognized for 0.75 percent of its liability for the payment of future indemnity claims, unless there was information to support the assessment rate being …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fd4eee4df5abf4809d551dfebde8be2ab6a3a9237e374c95e342e2c1975f514b","downloaded_from":"2026-09-10T00:14:40.851Z","last_downloaded_at":"2026-09-10T00:14:40.851Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482619","source_sha256":"0dd69d46134c4590a6b04e2351532092a66188f315fc620135b6e949c90531e0"}},{"citation":"405-30-55-15","para":"55-15","html":"
GHI would recognize a liability based on the current assessment rate, unless there was clear evidence that the rate would change. The liability would be based on the entire liability base that was subject to the assessment.
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