Flashcards in SSAP 53 Deck (8)
When is written premium recorded for most contracts; and what is the exception to this rule?
-Exception of WC, which can be recorded on an installment basis
When are the additional premium for endorsements and changes in coverage recorded?
Effective date of change
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
Accounting treatment of flat fees
Included in "other income"
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
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.
Accounting treatment of advance premiums
-Recorded as liabiilty
-Not considered income until due