# ASC 405-30-55: Liabilities — Insurance-Related Assessments — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/30/#55-implementation-guidance-and-illustrations) 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): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:d562420c8e6ae520c715ff380f46b6acd6edb724b86ffc842d0398697bf66ece Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/30/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [405-30-55-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:f1065cbc3bbdb4bdf9fc317740587fe18caa3750ff6d5e3a87584522e5e75094 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states.") on a ratable basis over the 5-year period following the year of each assessment. ##### [405-30-55-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:b8ea4f5365ab7c12b11ce1e234f59d8051d2cf4aa38d9ed6aa7245804a1f8343 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:a4f7799704535e13c9e3c8e05f8bbcd355acbb5b9261b6444d0a3ff9b9bd407d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-4](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:6bf0ba30de2bd3cd2bec74ed2cc3adcabbfee87e216ab9e0cc582891454d1db0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As of December 31, 19X0, ABC should recognize a liability equal to 1 percent of the [premiums written](https://asc.understandingaccounting.org/glossary/p/#premiums-written "The premiums on all policies an entity has issued in a period.") 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. ##### [405-30-55-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:5ae79943577373e60c5af65944c6a82060311712f306ebdd5a3026481fd4a2af Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](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.") 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. ##### [405-30-55-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:05b5b2106eeed3be8810501ff509542959a694e6c4cddcf4193e55d036e5eff8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-7](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-7) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:7a62c80adc3436aa8c44cdb392193fafeeeb2fe0394220c4b7ab51113232c258 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-8) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:d7f0735eb7db43963c26dfcd360471988bfba89bf1d8cbbe1cd291eaf55efeaf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-9](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-9) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:9cc4c9a68a2044e5e01888bdf64b627eb428f895aa920907d3b5034f84cce5d4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/asc/405/30/#405-30-30-9) , discounting is optional), assuming average annual subject premiums of $100,000 for the 3 years before the insolvency. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-530A389B-C873-46E0-AB17-71B6016FBF4B-low.gif) Recorded at Cash Payments Assessments 12/31/19X0 19X1 19X2 19X3 19X4 19X5 19X6 19X7 19X8 19X9 20X0 19X3 Assessment " 1,000 " 19X4 Assessment " 1,000 " 19X5 Assessment " 1,000 " Total " 3,000 " " 1,000 " " 1,000 " " 1,000 " Premium tax offset 19X3 Assessment (a) 200 200 200 200 200 19X4 Assessment (a) 200 200 200 200 200 19X5 Assessment (a) 200 200 200 200 200 Total " 3,000 " 200 400 600 600 600 400 200 Present value of assessments At 12/31/19X0 (b) " 2,470 " Present value of premium Tax offset at 12/31/19X0 (b) " 2,139 " "(a) Assumed that, based upon 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." "(b) Discounted at 5 percent, assuming all assessments are paid and offsets realized at the end of each year." ##### [405-30-55-10](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-10) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:f098ab1a49b36e788a7102988b470be6bcc4567bd7bbf09f49bacaf5d926f380 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-11](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-11) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:27025bd1482058c2aa329a1bbd7e5e24864e52a4516df14f0dd708e0b41fc880 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-12](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-12) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:5d78bbe52798ebdf8c2408b955489947fc5cbde45abee16ac3820f1b59a77ff7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-13](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-13) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:51c87ac9020645eb109e2b78ca4a1457214b92bf3f729e625d84aed702702233 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assessment rates have been climbing steadily, from 0.6 percent 5 years previous to 0.75 percent in 19X0. ##### [405-30-55-14](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-14) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:fd4eee4df5abf4809d551dfebde8be2ab6a3a9237e374c95e342e2c1975f514b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-55-15](https://asc.understandingaccounting.org/asc/405/30/#405-30-55-15) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:40.851Z to 2026-09-10T00:14:40.851Z Record version: sha256:c670f6e8a655df39dd75de6d111bfa86021117361147fc837d43eea36433e6e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.