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2022 Loss Reserve Discount Factors Released

2022 Loss Reserve Discount Factors Released

On December 23, 2022, the Internal Revenue Service released Revenue Procedure 2023-10. This procedure applies to insurance companies that are required to discount unpaid losses under Section 846 of the Internal Revenue Code (IRC) and estimated salvage recoverable under  Section 832. Provisions of the new procedures were amended by the Tax Cuts and Jobs Act in 2017.

The released Revenue Procedure 2023-10 provides insurance companies the loss payment patterns for the 2022 determination year and the new property and casualty discount factors for the 2022 accident year. The loss payment patterns are used to calculate discounted unpaid losses and discounted estimated salvage recoverable. The discount factors are calculated using a corporate bond yield curve methodology and are determined by assuming all loss payments occur in the middle of the calendar year.

The interest rate for 2022 is 2.67%, determined by using semiannual compounding. Tables 3 and 4 in Section 5 shown in the Revenue Procedure present the discount factors by each line of business for losses incurred in 2022 and earlier accident years.

Get Access to Our Template

Brown Plus has put together a 2022 Discounted Unpaid Losses and Estimated Salvage Recoverable template for our clients to use. This template includes instructions on entering your data, the 2022 discount factors from the Revenue Procedure, Schedule P inputs and a summary of data. To access our template, download it here.

Disclaimer: This resource is intended for illustrative purposes only. Although our Firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. This is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.

Please contact Brown Plus if you have any questions.

Posted In: Property & Casualty Insurance | Downloadable Resources

About the Author - Carrie Small, CPA, MST

Carrie is a Tax Principal at Brown Plus. She has over 20 years of experience providing tax compliance and consulting services to privately held and public companies, with a specialization in insurance taxation.

Carrie is a leader within the Brown Plus Insurance Practice, which provides a full range of audit, tax and advisory services to insurance companies across the country. The Brown Plus Insurance Practice is one of the nation’s largest audit practices as ranked by AM Best. Within the practice, Carrie specializes in providing tax compliance, tax provision and tax consulting services to insurance entities.

Disclaimer: Information provided by Brown Plus as part of this blog post is intended for reference and information only. As the information is designed solely to provide guidance and is not intended to be a substitute for someone seeking personalized professional advice based on specific factual situations, responding to such inquiries does NOT create a professional relationship between Brown Plus and the reader and should not be interpreted as such. Although Brown Plus has made every reasonable effort to ensure that the information provided is accurate, Brown Plus makes no warranties, expressed or implied, on the information provided. The reader accepts the information as is and assumes all responsibility for the use of such information.