Property and Casualty Contracts

By National Association of Insurance Commissioners · 2025 · SSAP No. 65

Study guide: Exam 6U

Statement of Statutory Accounting Principles No. 65 of the NAIC's Accounting Practices and Procedures Manual. It establishes statutory accounting principles for property and casualty insurance contracts, covering claims-made policies, discounting, structured settlements, policies with long coverage periods, high deductible policies, asbestos and environmental exposures, excess statutory reserves and policyholder dividends.

On the syllabus

Exam 6U — objectives C1–C2; NAIC Accounting Practices and Procedures Manual, 2025, SSAP No. 65, paragraphs 1-46, available in Appendix IV of the COPLFR P&C Practice Note (as the content outline states it)

Scope of Statement

The statement establishes statutory accounting principles for property and casualty insurance contracts; topics it does not cover follow the more general statutory accounting guidance.
Title insurance, mortgage guaranty insurance and financial guaranty insurance are outside its scope and are addressed in SSAP Nos. 57, 58 and 60.

Summary Conclusion

Claims-Made Policies
- A claims-made policy may cover only claims reported within the policy dates that occur after a specified retroactive date, which eliminates duplicate coverage when converting from occurrence coverage.
Discounting
- Except for fixed and reasonably determinable payments, such as workers' compensation tabular indemnity reserves and long-term disability claims, property and casualty loss reserves are not discounted, and no loss adjustment expense reserves are discounted.
- Tabular reserves are indemnity reserves calculated using discounts determined with reference to actuarial tables that incorporate interest and contingencies such as mortality, remarriage, inflation or recovery from disability.
Structured Settlements
- Structured settlements are periodic fixed payments to a claimant for a determinable period or for life, frequently funded by an annuity the reporting entity purchases; the accounting depends on whether the entity or the claimant is the payee.
Policies with Coverage Periods Equal to or in Excess of Thirteen Months
- These are single premium or fixed premium contracts, such as home warranty and mechanical breakdown policies, that generally are not subject to cancellation or premium modification by the reporting entity.
High Deductible Policies
- High deductible plans, particularly workers' compensation, differ from self insurance coupled with an excess of loss policy because state laws generally require the reporting entity to fund the deductible and periodically review the insured's financial viability.
Asbestos and Environmental Exposures
Excess Statutory Reserve
- The statement eliminates the requirement to record excess statutory reserves, which do not meet the definition of a liability in SSAP No. 5R.
Policyholder Dividends
- Dividends to policyholders become liabilities when declared by the board of directors; incurred policyholder dividends are reported in the statement of income.
Relevant Literature
Effective Date and Transition

References

Other
Relevant Issue Papers

Exhibit A Guidelines for States Who Prescribe or Permit Discounting on a Non-Tabular Basis

Sources

Property and Casualty Practice Note 2025 (American Academy of Actuaries, COPLFR) — the text of SSAP No. 65 as reproduced in its Appendix IV (pp. 65-1 to 65-11, marked © 1999-2025 NAIC): status table, contents, section headings and the opening paragraphs of the sections summarized above (348 pages, sha256 299cb328818f8669014180a0e1c8543121996b2f9c94f83ea0d8f131d3afe4c3); the NAIC's own Accounting Practices and Procedures Manual is sold by the NAIC and was not read
CAS Exam 6U Content Outline, Fall 2026 — the citation (Accounting Practices and Procedures Manual, 2025), the assigned paragraphs and the note that the material is in Appendix IV of the COPLFR practice note