P&C Accounting for Deferred Acquisition Costs and Premium Deficiency Reserves

Learn from a discussion of the accounting and reporting of deferred acquisition costs and premium deficiency reserves.

Upon completion of this course, you will:

• Be able to define acquisition costs
• Understand the Statutory accounting treatment of acquisition costs
• Understand the GAAP treatment of acquisition costs
• Understand how to calculate deferred acquisition costs
• Understand how to test for the recoverability of deferred acquisition costs
• Understand when premium deficiency reserves are required
• Prepare acquisition cost disclosures

Course Content:

• Overview of P&C expenses
• Definition and Accounting for Acquisition Costs on Statutory and GAAP basis
• Calculation of Deferred Acquistion Costs (DAC)
• Testing for the recoverability of DAC
• Treatment of ceding commissions
• Premium Deficiency Reserves (PDR)
• Reporting and disclosures for DAC and PDR

Prerequisites and Advance Preparation: A general understanding of operating expense concepts is helpful. No advance preparation is required.

CPE Credits: 1 hour in Accounting

NASBA Publication/Revision Date: March 2021

Level: Basic to Intermediate

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