Actuarial Notes

Retrospectively Rated Contracts

By National Association of Insurance Commissioners · 2025 · SSAP No. 66

Study guide: Exam 6U

Statement of Statutory Accounting Principles No. 66 of the NAIC's Accounting Practices and Procedures Manual. It establishes statutory accounting principles for retrospectively rated contracts, which it applies to property and casualty, life insurance and accident and health contracts; retrospective reinsurance contracts are addressed in SSAP No. 62R.

On the syllabus

  • Exam 6U — objective D2; NAIC Accounting Practices and Procedures Manual, 2025, SSAP No. 66, paragraphs 1-5, 7.a., 8, 9.a. and 10-14, available in Appendix IV of the COPLFR P&C Practice Note (as the content outline states it)

Scope of Statement

  • The statement applies to property and casualty contracts, life insurance contracts and accident and health contracts.
  • Retrospective reinsurance contracts are not within its scope and are addressed in SSAP No. 62R.

Summary Conclusion

  • A retrospectively rated contract has a final policy premium calculated from the insured's loss experience during the policy term, including loss development after the term, under a formula in the policy or required by law; such contracts are also called loss sensitive contracts.
  • Amounts due from and to insureds under retrospectively rated contracts meet the definitions of assets and liabilities in SSAP Nos. 4 and 5R and are admitted assets to the extent they conform to the statement.
  • Retrospective premium adjustments are estimated from experience to date, for property and casualty contracts either by actuarially accepted methods under filed and approved plans (one net asset or liability) or by reviewing each retrospectively rated risk individually (an asset or liability for each risk).
  • Assumptions used in estimating adjustments are consistent with those used for claim and loss reserves, including IBNR, and contingent commissions; contingent commissions and related expenses are adjusted in the same period.
  • Estimated adjustments for the expired portion of the policy period are an immediate adjustment to premium; for property and casualty entities, accrued additional retrospective premiums are a receivable and accrued return premiums are part of the change in unearned premium liability.
  • Disclosures
  • Relevant Literature
  • Effective Date and Transition

References

  • Other
  • Relevant Issue Papers

Related readings

  • Statements of Actuarial Opinion on Property and Casualty Loss Reserves Practice Note (COPLFR - 2024) — its Appendix IV reproduces this statement, as the content outline notes

Sources

  • Property and Casualty Practice Note 2025 (American Academy of Actuaries, COPLFR) — the text of SSAP No. 66 as reproduced in its Appendix IV (pp. 66-1 to 66-6, marked © 1999-2025 NAIC): status table, contents, paragraphs 1-9 and the divisions beyond (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