# ASC 405-30: Liabilities — Insurance-Related Assessments Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/30/) 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): 2026-09-10T00:14:14.713Z to 2026-09-10T00:14:44.711Z Record version: sha256:ba259c1644f033f5eb4b0ced62929390aee1e93231e19f8023ced225eda49eb1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30: Liabilities — Insurance-Related Assessments ### Machine-generated study aids ```json { "summary": "ASC 405-30 governs when and how entities—insurers and self-insurers alike—accrue liabilities for statutory or regulatory insurance-related assessments such as state guaranty-fund assessments, insurance department administrative assessments, and workers' compensation second-injury fund assessments. A liability is recognized only when an assessment is probable, the obligating event has occurred by the balance sheet date, and the amount is reasonably estimable (405-30-25-1); the obligating event differs by assessment mechanism (retrospective vs. prospective vs. prefunded premium-based, and loss-based). Related recoveries via premium tax offsets or policy surcharges are recognized as assets when probable (405-30-25-8), but recoveries expected only through future premium rate structures are not (405-30-25-10).", "key_points": [ "A liability is accrued only when all three conditions are met: probability of assessment, occurrence of the obligating event on or before the financial statement date, and ability to reasonably estimate the amount (405-30-25-1).", "Premium-based guaranty-fund assessments (other than prefunded) are presumed probable upon a formal determination of insolvency and presumed not probable before it; prefunded and premium-based administrative assessments are probable when the underlying premiums are written, and loss-based assessments when the losses are incurred (405-30-25-2 through 25-3).", "The obligating event for premium-based assessments is generally writing (or becoming obligated to write or renew) the premiums, but is the insolvency itself where state law or regulatory practice means the entity cannot avoid the assessment by ceasing to write premiums; for loss-based assessments it is incurring the losses (405-30-25-4).", "For retrospective-premium-based assessments the entire estimated future assessment for an insolvency is accrued upon formal determination of insolvency, because the obligating premium has already been written (405-30-25-6(a)); prospective-premium-based assessments are accrued as premiums are written unless unavoidable (405-30-25-6(b)).", "If the estimate is a range with no better estimate within it, the minimum amount is accrued; if a best estimate exists, that amount is recorded (405-30-25-5; 405-30-30-8).", "An asset for premium tax offsets or policy surcharges is recognized when probable, measured on current laws and in-force policies (excluding expected renewals of short-duration contracts but reflecting persistency for long-duration contracts), subject to a valuation allowance; no asset is recorded for recovery through future premium rate structures (405-30-25-8 through 25-10; 405-30-30-11; 405-30-35-1).", "Discounting of the liability (and asset) is optional where the amount and timing of cash flows are fixed or reliably determinable; disclosure of discounted vs. undiscounted amounts, discount rate, and expected payment/realization periods is required (405-30-30-9 through 30-12; 405-30-50-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Contingencies and guarantees", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The exam trap is conflating the event that makes an assessment probable (usually the insolvency) with the event that obligates the entity (usually writing the premium)—for prospective-premium-based assessments an insurer that can stop writing business accrues only for premiums already written, whereas a retrospective assessment is accrued in full at insolvency. Also remember the recovery asymmetry: premium tax offsets and policy surcharges can be assets, but expected recovery through future premium rate structures cannot.", "related_topics": [ "450-20", "944", "720-50", "275-10", "855-10", "405-20" ], "key_concepts": [ "guaranty-fund assessment", "obligating event", "formal determination of insolvency", "retrospective-premium-based assessment", "prospective-premium-based assessment", "loss-based assessment", "premium tax offset", "second-injury fund" ] } ``` Source downloaded (UTC): 2026-09-10T00:14:14.713Z to 2026-09-10T00:14:14.713Z Record version: sha256:37c2636d34d006e413bef2cb1215c0663b939a6ea1e976c65bab24bda31ad2d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/30/#00-status) SEC content: no ##### [405-30-00-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:14.713Z to 2026-09-10T00:14:14.713Z Record version: sha256:ec36c4b6969a975bf7c5a5f949276ad84ceb50189b28bd9a7193c450a34dd4a3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ReinsuranceAddedAccounting Standards Update No. 2016-1912/14/2016
405-30-05-1AmendedAccounting Standards Update No. 2011-0607/21/2011
405-30-15-3AmendedAccounting Standards Update No. 2016-1912/14/2016
405-30-15-3AmendedAccounting Standards Update No. 2011-0607/21/2011
405-30-30-7AmendedAccounting Standards Update No. 2016-1912/14/2016
Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:3d3815466f5e5d5777787f745cfc24011b7336efe3d75b5d84177b28986b8fa5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/30/#05-overview-and-background) SEC content: no ##### [405-30-05-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:5f2593e713bdb5cdc70288e190dfbb2b1e6a407321fc896f9a8adaad99bc66a9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### State Guaranty Funds ##### [405-30-05-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:faf64a69824e3ba3c91fd51ffd4569e9ab133a707725eafdef93cbdb77be82e1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-05-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:5552c32756d6ed4d94b5db52a93fa818c2498776d248e5342f39d8e32f72e6e3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/l/#life-annuity-and-health-insurance-entities "An entity that may issue annuity, endowment, and accident and health insurance contracts as well as life insurance contracts. Life and health insurance entities may be either stock or mutual entities.") typically assess entities based on [premiums written](https://asc.understandingaccounting.org/glossary/p/#premiums-written "The premiums on all policies an entity has issued in a period.") 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](https://asc.understandingaccounting.org/glossary/p/#property-and-casualty-insurance-entity "An entity that issues insurance contracts providing protection against either of the following: Damage to or loss of property caused by various perils, such as fire and theft Legal liability resulting from injuries to other persons or damage to their property. Property and liability insurance entities may be either stock or mutual 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. ##### [405-30-05-4](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:4c6c4576272a885575b26cac4211c183a071d9056f0b8b65486ca01e6e5fc440 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. State laws often allow for recoveries of guaranty-fund assessments by entities subject to assessments through such mechanisms as [premium tax offsets](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states."), 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. #### Other Insurance-Related Assessments ##### [405-30-05-5](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:b1304c0fdfe3029e0f73679c62ec900d36e9f6581ee04f5d00d13d13ed6cc314 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-30-05-6](https://asc.understandingaccounting.org/asc/405/30/#405-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:16.426Z to 2026-09-10T00:14:16.426Z Record version: sha256:8b033e43f1c7bf219f5b34d705460e7077660a6194eb7b5736f7d617fa0cf098 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/i/#incurred-losses "Losses paid or unpaid for which the entity has become liable during a period.") or paid losses in relation to that amount for all entities subject to that assessment in the particular jurisdiction. Source downloaded (UTC): 2026-09-10T00:14:18.183Z to 2026-09-10T00:14:18.183Z Record version: sha256:16cbe4b0b6ccd7fe1ff2caee1a27482c70c84289447739f33c523b0bd89bfd08 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/405/30/#10-objectives) SEC content: no ##### [405-30-10-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:18.183Z to 2026-09-10T00:14:18.183Z Record version: sha256:5edaf5588ca1e1f950ac994d8e7965bd52ddf8288e225a2401143980861819a0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The objective of this Subtopic is to establish consistent accounting and disclosures for guaranty-fund and other insurance-related assessments to improve comparability of reported information. Source downloaded (UTC): 2026-09-10T00:14:22.271Z to 2026-09-10T00:14:22.271Z Record version: sha256:a1ba8bf5f08cd30d76e2c7614179e1157585fd41bce4175238600febcef64130 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/30/#15-scope-and-scope-exceptions) SEC content: no #### Entities ##### [405-30-15-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:22.271Z to 2026-09-10T00:14:22.271Z Record version: sha256:bf8ee50b34ade6d2a9c5c3dab295a689cd0b02e7c0d034662093fdf373867713 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to all entities that are subject to guaranty-fund and other insurance-related assessments, including entities that are subject to insurance-related assessments because they self-insure against loss or liability. For example, one state specifies that self-insurers of workers' compensation should use as a base for assessment the amount of premium the self-insurer would have paid if it had insured its liability with an insurer for the previous calendar year. #### Transactions ##### [405-30-15-2](https://asc.understandingaccounting.org/asc/405/30/#405-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:22.271Z to 2026-09-10T00:14:22.271Z Record version: sha256:06fdddf29444a58002d7a1da3253685f07a8050450bef6a5b6036d0d7e91a5f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to assessments mandated by statute or regulatory authority that are related directly or indirectly to underwriting activities (including self-insurance), except for income taxes and premium taxes. ##### [405-30-15-3](https://asc.understandingaccounting.org/asc/405/30/#405-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:22.271Z to 2026-09-10T00:14:22.271Z Record version: sha256:8534a9037f9a4cf6688df2e3733678b892a6e0ae0d87d49938286f3d6a714d79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic does not apply to the following transactions and activities: 1. a Amounts payable or paid as a result of [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.") contracts or arrangements that are in substance reinsurance, including assumed reinsurance activities and certain [involuntary pools](https://asc.understandingaccounting.org/glossary/i/#involuntary-pools "A residual market mechanism for insureds who cannot obtain insurance in the voluntary market.") that are covered by Topic 944. 2. b Assessments of depository institutions related to bank insurance and similar funds. 3. c 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). The accounting for the Acts' fee is addressed in Subtopic 720-50. 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). 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. Source downloaded (UTC): 2026-09-10T00:14:35.204Z to 2026-09-10T00:14:35.204Z Record version: sha256:19656d9ed34b4ace8d1e45749d2064ebb6dd8a8a5e9a90a003fe822726c1c972 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/30/#35-subsequent-measurement) SEC content: no #### Asset for Premium Tax Offsets and Policy Surcharges ##### [405-30-35-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:35.204Z to 2026-09-10T00:14:35.204Z Record version: sha256:a60dee53e81cef37d02bbdef0e171dfd8dd8f909a2327c0c54e1ed0010da993e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The asset recorded under paragraph [405-30-25-8](https://asc.understandingaccounting.org/asc/405/30/#405-30-25-8) for [premium tax offsets](https://asc.understandingaccounting.org/glossary/p/#premium-tax-offsets "Offsets against premium taxes levied on insurance entities by states.") and policy surcharges shall be subject to a valuation allowance to reflect any portion of the asset that is no longer probable of realization. Considering expected future premiums other than on [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 evaluating the recoverability of premium tax offsets or policy surcharges is not appropriate. Source downloaded (UTC): 2026-09-10T00:14:38.049Z to 2026-09-10T00:14:38.049Z Record version: sha256:a9c9316aed506364d894d118e816860c3b16a348493221c0a25188efabc312bd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/30/#50-disclosure) SEC content: no ##### [405-30-50-1](https://asc.understandingaccounting.org/asc/405/30/#405-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:14:38.049Z to 2026-09-10T00:14:38.049Z Record version: sha256:ac2c409f6b6c1dbf80b8aef7a4dbd6efe932e8db16b81dfd341bf0720378f962 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Sections 275-10-50 and 450-20-55 address disclosures related to loss contingencies. That guidance is applicable to assessments covered by this Subtopic. Additionally, if amounts have been discounted, the entity shall disclose in the financial statements the undiscounted amounts of the liability and any related asset for [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 as well as the discount rate used. If amounts have not been discounted, the entity shall disclose in the financial statements the amounts of the liability, any related asset for premium tax offsets or policy surcharges, the periods over which the assessments are expected to be paid, and the period over which the recorded premium tax offsets or policy surcharges are expected to be realized. 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.