TIA Section A - NAIC SSAPs - SSAP 53 Flashcards
When is Written Premium recorded for most contracts?
✔️ Effective date
When is the exception to the rule of when WP is typically recorded for contracts?
✔️ WC which can be recorded in an installment basis
When are additional premium for endorsements and changes in coverage recorded?
Effective date of change
Two methods to uniformly earn premium throughout the year:
1️⃣ Daily Pro Rata
2️⃣ Monthly Pro Rata
Describe “daily pro rata” method
Based EP on number of days which have elapsed to the number remaining.
Describe “monthly pro rata” method
To calculate EP, assumes same WP on any day of the month, and so the mean will be written in the middle of the month
Accounting treatment of flat fees:
Included in “other income”
How is EBUB recorded before the exposure is audited:
Companies should estimate EBUB. Premium is modified by the level of this estimate.
How is EBUB recorded after the exposure is audited:
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 non-admitted. If any EBUB over this levels is not anticipated to be collected, it should also be written off.
Accounting treatment of advance premiums
🎦 Recorded as liability
💵 Not considered income until due
Necessary disclosure if the premium written through MGAs or TPAs exceed 5% of surplus
🆔 Name and address
🔢 Federal employer identification number
📜 Whether the party holds an exclusive contract
🖊 Type of business written
🤴🏻 Type of authority granted
🧾 Total premium written
