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Flashcards in SSAP 53 Deck (8)
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1

When is written premium recorded for most contracts; and what is the exception to this rule?

-Effective date
-Exception of WC, which can be recorded on an installment basis

2

When are the additional premium for endorsements and changes in coverage recorded?

Effective date of change

3

2 methods to uniformly earn premium throughout the year

1. Daily pro rata: compares the number of days which have elapsed to the number remaining
2. Monthly pro rata: assumes that the same amount of business is written on any day of the month, and therefore the mean will be written in the middle of the month

4

Accounting treatment of flat fees

Included in "other income"

5

How is EBUB recorded, both before and after the exposure is audited?

-Prior to the audit, companies should estimate EBUB. Premium is modified by the level of this estimate.
-Once the audit is completed, EBUB shall be adjusted to reflect the actual exposures. This adjustment is recognized as revenue immediately

6

Rule to determine non admitted EBUB

10% of the EBUB in excess of the collateral held is nonadmitted. If any EBUB over this level is not anticipated to be collected, it should also be written off.

7

Accounting treatment of advance premiums

-Recorded as liabiilty
-Not considered income until due

8

Necessary disclosure if the premium written through MGAs or TPAs exceeds 5% of surplus

-Name & address
-Federal employer ID number
-Whether the party holds an exclusive contract
-Type of business written
-Type of authority granted
-Total premium written