What are Statutory Accounting Principles (SAP)?
SAP is a set of accounting rules and regulations set forth by the National Association of Insurance Commissioners (NAIC) and is the prescribed method of accounting for insurance companies. This accounting method is more conservative than the Generally Accepted Accounting Principles (GAAP) and reflects the company in a quasi state of liquidation rather than an ongoing business. For example, many assets that are carried on a GAAP basis are not allowed or are valued differently under SAP. These assets could be considered non-admitted on the financial statements. Examples of these assets are goodwill, automobiles and buildings.
What is the National Association of Insurance Commissioners (NAIC)?
The NAIC is organized and governed by the Chief Insurance Regulators from each of the 50 states, Washington DC, and the five U.S. territories. The State Department of Insurance divisions utilize the NAIC to establish standards and best practices, conduct peer review, and coordinate regulatory oversight. The NAIC has three meetings per year and conducts numerous phone meetings throughout the year to review, change or discuss the SAP regulations.
What companies use Statutory Accounting Principles (SAP)?
Most insurance companies writing policies/premiums within the 50 states, Washington DC or the five U.S. territories are subject to the SAP rules. This prescribed accounting method must be used when reporting financials to the Department of Insurance (DOI) in the state where they are writing business and with the National Association of Insurance Commissioners (NAIC).
What is Statutory Reporting?
Statutory Reporting requires that insurance companies use a standard form known as the Annual/Quarterly Statement Blank. It must be filed with at least the National Association of Insurance Commissioners (NAIC) at least once a quarter and many of the State Department of Insurance Divisions require that it be filed directly with them as well.
Where do I find guidance for Statutory Reporting?
The National Association of Insurance Commissioners (NAIC) provides products for purchase relating to Statutory accounting. Many of these products provide guidance for statutory filings such as the Accounting Practices & Procedures Manual.
ETM offers a wide variety of services relating to Statutory Reporting and accounting guidance. We can provide an in depth expertise for most situations, whether you need a little help navigating insurance regulation and statutory accounting or a lot of help completing the filings.
How many times a year must insurance companies report to the Department of Insurance?
The National Association of Insurance Commissioners (NAIC) requires multiple filings during the year with varying due dates.
What types of forms does each state’s individual Department of Insurance require?
Every state has a unique list of forms that must be filled out and filed during the year that are separate from the required National Association
of Insurance Commissioners (NAIC) filings.
Do I need a separate audit to comply with the National Association of Insurance Commissioners’ (NAIC) rules?
Yes, an audit conducted by a Certified Public Accounting firm must be filed annually with the NAIC. This audit must form an opinion using the Statutory Accounting Principles.
Can a Company outsource statutory filings or must it be completed internally?
Outsourcing these filings is a widely accepted practice. There are many benefits to outsourcing including saving time, gaining efficiencies and minimizing risk.
ETM specializes in the statutory filings and will provide the expert knowledge and guidance needed to be compliant with all the NAIC and State regulations.
Eagle Technology Management
ETM is a web-application-development firm that specializes in providing statutory financial reporting, tax-compliance, and unclaimed property reporting services, making its clients more efficient, consistently accurate, and uniformly compliant.
- ETM Wings, UPEnterprise, and UPExchange Products Now SOC 2 Certified Through the American Institute of Certified Public AccountantsFebruary 22, 2017 - 8:58 am
- ETM delivers technology to address aspects of compliance required by many holders, yet not currently addressed by older technologies.January 12, 2016 - 5:00 am
- ETM Announces Matt Santill as Chief Information Security OfficerNovember 17, 2015 - 2:56 pm
- ETM Now Exceeds 40,000 UPExchange UsersOctober 14, 2015 - 11:49 am
Eagle Technology Management, Inc.
5825 Council Street NE
PO Box 11100
Cedar Rapids, IA 52410-1100