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IRS Publishes Loss Payment Patterns, Discount Factors For 2006.

DEC. 14, 2006

Rev. Proc. 2007-9; 2007-1 C.B. 278

DATED DEC. 14, 2006
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference
    Part III

    Administrative, Procedural, and Miscellaneous
  • Code Sections
  • Subject Area/Tax Topics
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2006-25010
  • Tax Analysts Electronic Citation
    2006 TNT 241-11
Citations: Rev. Proc. 2007-9; 2007-1 C.B. 278

Modified by Rev. Proc. 2008-70

Rev. Proc. 2007-9

SECTION 1. PURPOSE

This revenue procedure prescribes the loss payment patterns and discount factors for the 2006 accident year. These factors will be used for computing discounted unpaid losses under § 846 of the Internal Revenue Code. See Rev. Proc. 2003-17, 2003-1 C.B. 427, for background concerning the loss payment patterns and application of the discount factors.

SEC. 2. SCOPE

This revenue procedure applies to any taxpayer that is required to discount its unpaid losses under § 846 for a line of business using discount factors published by the Secretary.

SEC. 3. TABLES OF DISCOUNT FACTORS

.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2006. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2006, which is 3.98 percent, and by assuming all loss payments occur in the middle of the calendar year.

.02 If the groupings of individual lines of business on the annual statement change, taxpayers must discount the unpaid losses on the affected lines of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2000 annual statement. See Rev. Proc. 2003-17, 2003-1 C.B. 427, section 2, for additional background on discounting under section 846 and the use of the Secretary's tables.

.03 Section V of Notice 88-100, 1988-2 C.B. 439, sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. The tables separately provide discount factors for taxpayers who elect to use the composite method of section V of Notice 88-100. See Rev. Proc. 2002-74, 2002-2 C.B. 980.

.04 Section 2.03(4) of Rev. Proc 2003-17 requested comments as to whether a methodology should be adopted to smooth the raw payment data and thus produce a more stable pattern of discount factors. This issue will be addressed in the new determination year, which is 2007. Accordingly, taxpayers may still submit comments that should include a reference to Rev. Proc. 2007-9 on this issue to the following address:

CC:PA:LPD:PR (Rev. Proc. 2007-9), room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Comments may be hand delivered between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD (Rev. Proc. 2007-9), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, DC 20224. Alternatively, e-mail comments to Notice.Comments@irscounsel.treas.gov. All comments will be available for public inspection and copying.

.05 Tables.

 

Tables of Factors to be Used to Discount

 

Unpaid Losses Incurred in

 

Accident Year 2006

 

(Interest rate: 3.98 percent)

 

 

Accident and Health (Other Than Disability Income or Credit Disability Insurance)

Taxpayers that do not use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the 2006 and later taxable years.

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2006 taxable year.

 

Auto Physical Damage

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      89.6468       89.6468        10.3532       10.1356      97.8981

 

 2007      99.6845       10.0377         0.3155        0.3035      96.1907

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2008 and later years     0.1578  0.1578  0.1547  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 taxable year.

 

Commercial Auto/Truck Liability/Medical

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      28.8244       28.8244        71.1756       65.9439      92.6497

 

 2007      54.9871       26.1626        45.0129       41.8903      93.0628

 

 2008      72.8039       17.8168        27.1961       25.3896      93.3575

 

 2009      85.0572       12.2533        14.9428       13.9054      93.0572

 

 2010      91.6276        6.5704         8.3724        7.7589      92.6725

 

 2011      94.9514        3.3239         5.0486        4.6784      92.6676

 

 2012      97.0453        2.0938         2.9547        2.7295      92.3768

 

 2013      98.1574        1.1121         1.8426        1.7041      92.4822

 

 2014      98.7370        0.5796         1.2630        1.1809      93.4978

 

 2015      99.1070        0.3700         0.8930        0.8506      95.2504

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                     0.3700  0.5230  0.5072  96.9692

 

 2017 and later years     0.3700  0.1530  0.1501  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 97.1689 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Composite

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      40.9985       40.9985        59.0015       53.7593      91.1153

 

 2007      65.8439       24.8454        34.1561       30.5639      89.4832

 

 2008      77.5023       11.6583        22.4977       19.8923      88.4193

 

 2009      84.6221        7.1198        15.3779       13.4239      87.2935

 

 2010      90.2455        5.6234         9.7545        8.2239      84.3094

 

 2011      92.2780        2.0325         7.7220        6.4788      83.8997

 

 2012      94.3974        2.1195         5.6026        4.5754      81.6658

 

 2013      95.2526        0.8552         4.7474        3.8854      81.8439

 

 2014      96.2792        1.0266         3.7208        2.9933      80.4470

 

 2015      96.4323        0.1531         3.5677        2.9562      82.8624

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  0.1531  3.4145  2.9177  85.4512

 

 2017                  0.1531  3.2614  2.8777  88.2363

 

 2018                  0.1531  3.1083  2.8361  91.2444

 

 2019                  0.1531  2.9551  2.7928  94.5083

 

 2020 and later years  0.1531  2.8020  2.7478  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 88.1508 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Fidelity/Surety

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      38.3328       38.3328        61.6672       58.1879      94.3581

 

 2007      58.8485       20.5156        41.1515       39.5839      96.1907

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2008 and later years     20.5758 20.5758 20.1781 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 taxable year.

 

Financial Guaranty/Mortgage Guaranty

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006       4.0723        4.0723        95.9277       90.7812      94.6350

 

 2007      40.7639       36.6916        59.2361       56.9796      96.1907

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2008 and later years     29.6180 29.6180 29.0457 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 taxable year.

 

International (Composite)

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      40.9985       40.9985        59.0015       53.7593      91.1153

 

 2007      65.8439       24.8454        34.1561       30.5639      89.4832

 

 2008      77.5023       11.6583        22.4977       19.8923      88.4193

 

 2009      84.6221        7.1198        15.3779       13.4239      87.2935

 

 2010      90.2455        5.6234         9.7545        8.2239      84.3094

 

 2011      92.2780        2.0325         7.7220        6.4788      83.8997

 

 2012      94.3974        2.1195         5.6026        4.5754      81.6658

 

 2013      95.2526        0.8552         4.7474        3.8854      81.8439

 

 2014      96.2792        1.0266         3.7208        2.9933      80.4470

 

 2015      96.4323        0.1531         3.5677        2.9562      82.8624

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  0.1531  3.4145  2.9177  85.4512

 

 2017                  0.1531  3.2614  2.8777  88.2363

 

 2018                  0.1531  3.1083  2.8361  91.2444

 

 2019                  0.1531  2.9551  2.7928  94.5083

 

 2020 and later years  0.1531  2.8020  2.7478  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 88.1508 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Medical Malpractice -- Claims-Made

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006       7.3447        7.3447        92.6553       83.4596      90.0754

 

 2007      29.0191       21.6744        70.9809       64.6798      91.1228

 

 2008      53.3108       24.2917        46.6892       42.4836      90.9925

 

 2009      69.1517       15.8409        30.8483       28.0215      90.8363

 

 2010      82.0981       12.9464        17.9019       15.9352      89.0139

 

 2011      86.3995        4.3014        13.6005       12.1832      89.5793

 

 2012      89.7111        3.3116        10.2889        9.2913      90.3038

 

 2013      92.4688        2.7577         7.5312        6.8490      90.9420

 

 2014      94.5163        2.0475         5.4837        5.0337      91.7950

 

 2015      95.7635        1.2471         4.2365        3.9624      93.5285

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  1.2471  2.9894  2.8483  95.2819

 

 2017                  1.2471  1.7422  1.6900  97.0008

 

 2018 and later years  1.2471  0.4951  0.4855  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 95.9709 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Medical Malpractice -- Occurrence

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006       0.8316        0.8316        99.1684        84.5630      85.2721

 

 2007       7.4573        6.6257        92.5427        81.1723      87.7134

 

 2008      23.5575       16.1002        76.4425        67.9856      88.9369

 

 2009      41.0062       17.4487        58.9938        52.8989      89.6685

 

 2010      55.5832       14.5770        44.4168        40.1400      90.3712

 

 2011      68.9413       13.3581        31.0587        28.1163      90.5261

 

 2012      78.2095        9.2682        21.7905        19.7844      90.7937

 

 2013      82.8727        4.6632        17.1273        15.8167      92.3480

 

 2014      86.3178        3.4451        13.6822        12.9332      94.5260

 

 2015      91.0834        4.7656         8.9166         8.5884      96.3200

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2005 accident year and that are outstanding at the end of the tax year shown.

 2016 and later years     4.7656  4.1510  4.0708 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Miscellaneous Casualty

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      79.7790       79.7790        20.2210       19.5491      96.6770

 

 2007      94.9417       15.1627         5.0583        4.8656      96.1907

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2008 and later years     2.5292  2.5292  2.4803 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 taxable year.

 

Multiple Peril Lines

 

 

(Homeowners/Farmowners, Commercial Multiple Peril, and

 

Special Liability (Ocean Marine, Aircraft (All Perils), Boiler and

 

Machinery))

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      59.7445       59.7445        40.2555       37.4341      92.9914

 

 2007      81.0347       21.2902        18.9653       17.2142      90.7672

 

 2008      87.3325        6.2978        12.6675       11.4775      90.6059

 

 2009      91.0659        3.7334         8.9341        8.1273      90.9698

 

 2010      95.1781        4.1122         4.8219        4.2575      88.2964

 

 2011      95.7605        0.5824         4.2395        3.8331      90.4149

 

 2012      97.0539        1.2933         2.9461        2.6668      90.5202

 

 2013      97.6441        0.5903         2.3559        2.1711      92.1567

 

 2014      98.7037        1.0596         1.2963        1.1770      90.8007

 

 2015      98.6217       -0.0821         1.3783        1.3076      94.8644

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  0.5226  0.8558  0.8267  96.6061

 

 2017 and later years  0.5226  0.3332  0.3267  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 96.9550 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Other (Including Credit)

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      69.1729       69.1729        30.8271       29.7431      96.4837

 

 2007      91.2168       22.0439         8.7832        8.4487      96.1907

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2008 and later years     4.3916   4.3916  4.3068  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 taxable year.

 

Other Liability -- Claims-Made

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      14.9618       14.9618        85.0382       75.3352      88.5898

 

 2007      36.2113       21.2494        63.7887       56.6653      88.8328

 

 2008      54.2876       18.0763        45.7124       40.4881      88.5713

 

 2009      64.2163        9.9288        35.7837       31.9751      89.3567

 

 2010      73.2732        9.0569        26.7268       24.0123      89.8438

 

 2011      80.5748        7.3016        19.4252       17.5225      90.2054

 

 2012      87.6200        7.0452        12.3800       11.0359      89.1433

 

 2013      89.9155        2.2955        10.0845        9.1344      90.5790

 

 2014      93.3946        3.4791         6.6054        5.9503      90.0827

 

 2015      94.6170        1.2223         5.3830        4.9407      91.7827

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  1.2223  4.1607  3.8909  93.5158

 

 2017                  1.2223  2.9383  2.7993  95.2689

 

 2018                  1.2223  1.7160  1.6643  96.9877

 

 2019 and later years  1.2223  0.4936  0.4841  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.6440 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Other Liability -- Occurrence

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      19.1133       19.1133        80.8867       69.7012      86.1714

 

 2007      36.4434       17.3301        63.5566       54.8037      86.2281

 

 2008      52.1648       15.7215        47.8352       40.9536      85.6140

 

 2009      63.2383       11.0734        36.7617       31.2919      85.1209

 

 2010      72.0780        8.8397        27.9220       23.5235      84.2469

 

 2011      75.9021        3.8241        24.0979       20.5602      85.3195

 

 2012      82.9305        7.0284        17.0695       14.2116      83.2573

 

 2013      85.1441        2.2136        14.8559       12.5200      84.2763

 

 2014      89.3006        4.1565        10.6994        8.7799      82.0597

 

 2015      89.9898        0.6892        10.0102        8.4266      84.1796

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  0.6892  9.3210  8.0591  86.4622

 

 2017                  0.6892  8.6318  7.6771  88.9398

 

 2018                  0.6892  7.9426  7.2798  91.6560

 

 2019                  0.6892  7.2533  6.8668  94.6705

 

 2020 and later years  0.6892  6.5641  6.4373  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 90.4497 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Private Passenger Auto Liability/Medical

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      43.1926       43.1926        56.8074       53.5261      94.2237

 

 2007      72.2008       29.0082        27.7992       26.0766      93.8032

 

 2008      84.5632       12.3625        15.4368       14.5083      93.9856

 

 2009      91.9316        7.3684         8.0684        7.5722      93.8501

 

 2010      95.8729        3.9413         4.1271        3.8546      93.3975

 

 2011      97.7804        1.9075         2.2196        2.0629      92.9415

 

 2012      98.7957        1.0153         1.2043        1.1098      92.1473

 

 2013      99.2491        0.4535         0.7509        0.6915      92.0971

 

 2014      99.5195        0.2703         0.4805        0.4434      92.2703

 

 2015      99.6353        0.1159         0.3647        0.3429      94.0275

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  0.1159  0.2488  0.2384  95.8137

 

 2017                  0.1159  0.1330  0.1297  97.5849

 

 2018 and later years  0.1159  0.0171  0.0168  98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 96.3943 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Products Liability -- Claims-Made

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006       6.5804        6.5804        93.4196       80.2960      85.9520

 

 2007      26.7183       20.1379        73.2817       62.9570      85.9110

 

 2008      43.1834       16.4652        56.8166       48.6731      85.6671

 

 2009      43.9209        0.7375        56.0791       49.8583      88.9071

 

 2010      54.3806       10.4597        45.6194       41.1768      90.2617

 

 2011      78.3630       23.9824        21.6370       18.3607      84.8579

 

 2012      82.8643        4.5013        17.1357       14.5014      84.6271

 

 2013      68.2184      -14.6459        31.7816       30.0132      94.4355

 

 2014      79.1582       10.9399        20.8418       20.0522      96.2118

 

 2015      89.6963       10.5381        10.3037       10.1045      98.0675

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016 and later years                          98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Products Liability -- Occurrence

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006       9.4198        9.4198        90.5802       76.5659      84.5283

 

 2007      20.5845       11.1647        79.4155       68.2285      85.9133

 

 2008      36.7807       16.1962        63.2193       54.4286      86.0950

 

 2009      55.5974       18.8167        44.4026       37.4074      84.2460

 

 2010      66.6238       11.0263        33.3762       27.6526      82.8511

 

 2011      77.2636       10.6399        22.7364       17.9036      78.7443

 

 2012      79.1888        1.9251        20.8112       16.6531      80.0197

 

 2013      83.6816        4.4928        16.3184       12.7345      78.0378

 

 2014      85.5507        1.8691        14.4493       11.3354      78.4496

 

 2015      85.7291        0.1784        14.2709       11.6047      81.3169

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  0.1784  14.0925 11.8846 84.3329

 

 2017                  0.1784  13.9141 12.1757 87.5062

 

 2018                  0.1784  13.7357 12.4784 90.8463

 

 2019                  0.1784  13.5573 12.7931 94.3632

 

 2020 and later years  0.1784  13.3789 13.1204 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 89.8177 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Reinsurance A (Nonproportional Assumed Property)

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      25.0571       25.0571        74.9429       69.5252      92.7708

 

 2007      52.0402       26.9831        47.9598       44.7775      93.3645

 

 2008      82.4709       30.4307        17.5291       15.5292      88.5910

 

 2009      85.6387        3.1678        14.3613       12.9170      89.9434

 

 2010      92.7228        7.0840         7.2772        6.2075      85.3001

 

 2011      91.8604       -0.8624         8.1396        7.3339      90.1015

 

 2012      96.5016        4.6412         3.4984        2.8932      82.6989

 

 2013      96.1872       -0.3143         3.8128        3.3288      87.3078

 

 2014      97.6206        1.4333         2.3794        1.9998      84.0432

 

 2015      97.8419        0.2214         2.1581        1.8536      85.8925

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  0.2214  1.9367  1.7017 87.8641

 

 2017                  0.2214  1.7154  1.5437 89.9920

 

 2018                  0.2214  1.4940  1.3794 92.3296

 

 2019                  0.2214  1.2727  1.2086 94.9667

 

 2020 and later years  0.2214  1.0513  1.0310 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 90.9754 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Reinsurance B (Nonproportional Assumed Liability)

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006       8.9223        8.9223        91.0777       76.3687      83.8500

 

 2007      27.3618       18.4395        72.6382       60.6053      83.4344

 

 2008      44.5758       17.2140        55.4242       45.4641      82.0294

 

 2009      53.8781        9.3023        46.1219       37.7880      81.9307

 

 2010      60.8896        7.0115        39.1104       32.1422      82.1834

 

 2011      69.7327        8.8430        30.2673       24.4042      80.6288

 

 2012      76.6292        6.8965        23.3708       18.3431      78.4871

 

 2013      79.4030        2.7738        20.5970       16.2447      78.8690

 

 2014      83.8936        4.4906        16.1064       12.3121      76.4422

 

 2015      80.1707       -3.7229        19.8293       16.5983      83.7063

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  1.1805  18.6487 16.0552 86.0925

 

 2017                  1.1805  17.4682 15.4904 88.6775

 

 2018                  1.1805  16.2877 14.9031 91.4992

 

 2019                  1.1805  15.1072 14.2924 94.6071

 

 2020 and later years  1.1805  13.9266 13.6575 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 90.3273 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Reinsurance C (Nonproportional Assumed Financial Lines)

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      17.1195       17.1195        82.8805       74.5159      89.9077

 

 2007      46.6590       29.5395        53.3410       47.3601      88.7874

 

 2008      67.7135       21.0545        32.2865       27.7757      86.0287

 

 2009      78.1379       10.4244        21.8621       18.2513      83.4837

 

 2010      89.7346       11.5967        10.2654        7.1524      69.6754

 

 2011      92.1268        2.3921         7.8732        4.9978      63.4788

 

 2012      89.7323       -2.3945        10.2677        7.6384      74.3925

 

 2013      90.0460        0.3137         9.9540        7.6225      76.5774

 

 2014      94.8867        4.8407         5.1133        2.9898      58.4711

 

 2015      86.7041       -8.1827        13.2959        11.4527     86.1367

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  1.4277  11.8683 10.4527 88.0727

 

 2017                  1.4277  10.4406  9.4129 90.1568

 

 2018                  1.4277   9.0129  8.3317 92.4421

 

 2019                  1.4277   7.5852  7.2075 95.0203

 

 2020 and later years  1.4277   6.1575  6.0385 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 91.0632 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

 

Special Property

 

(Fire, Allied Lines, Inland Marine, Earthquake, Glass, Burglary

 

and Theft)

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      62.9320       62.9320        37.0680       35.7122      96.3422

 

 2007      88.4950       25.5631        11.5050       11.0667      96.1907

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factor to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2008 and later years     5.7525  5.7525  5.6413 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0675 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2008 taxable year.

 

Workers' Compensation

 

 

           Estimated                                  Discounted

 

           Cumulative    Estimated      Unpaid        Unpaid

 

           Losses        Losses Paid    Losses at     Losses at    Discount

 

 Tax Year  Paid          Each Year      Year End      Year End     Factors

 

            (%)           (%)            (%)            (%)          (%)

 

 

 2006      28.2489       28.2489        71.7511       64.2325      89.5214

 

 2007      57.8739       29.6249        42.1261       36.5803      86.8351

 

 2008      71.2999       13.4260        28.7001       24.3455      84.8274

 

 2009      77.7584        6.4585        22.2416       18.7287      84.2059

 

 2010      81.9301        4.1717        18.0699       15.2202      84.2298

 

 2011      83.7739        1.8437        16.2261       13.9459      85.9472

 

 2012      86.5350        2.7611        13.4650       11.6854      86.7836

 

 2013      88.4367        1.9017        11.5633       10.2113      88.3080

 

 2014      89.5926        1.1559        10.4074        9.4390      90.6955

 

 2015      91.6441        2.0515         8.3559        7.7228      92.4232

 

 

Taxpayers that do not use the composite method of Notice 88-100 should use the following factors to discount unpaid losses incurred in this line of business in the 2006 accident year and that are outstanding at the end of the tax year shown.

 2016                  2.0515  6.3045  5.9383 94.1919

 

 2017                  2.0515  4.2530  4.0828 95.9970

 

 2018                  2.0515  2.2016  2.1534 97.8116

 

 2019 and later years  2.0515  0.1501  0.1472 98.0675

 

 

Taxpayers that use the composite method of Notice 88-100 should use 95.2214 percent to discount unpaid losses incurred in this line of business in 2006 and prior years and that are outstanding at the end of the 2016 taxable year.

DRAFTING INFORMATION

The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Ms. Hossofsky at (202) 622-8435 (not a toll-free call).

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference
    Part III

    Administrative, Procedural, and Miscellaneous
  • Code Sections
  • Subject Area/Tax Topics
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2006-25010
  • Tax Analysts Electronic Citation
    2006 TNT 241-11
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