The National Association of Insurance Commissioners has adopted an accounting change that will help insurers include a higher percentage of the tax payment reductions they expect to enjoy in the future in their financial statements.

The change, a revision of Statement of Statutory Accounting Principles Number 10-Income Taxes, will affect how insurers handle deferred tax assets.

The NAIC, Kansas City, Mo., approved the DTA SSAP revision this weekend in San Francisco, at its winter meeting.

An insurer may be able to say it has a deferred tax asset when a difference between a statutory accounting value and a tax accounting value is on track to reverse and, at some point, reduce future tax payments.

The American Council of Life Insurers, Washington, included an easing of DTA accounting rules in a package of emergency accounting relief proposals it submitted to the NAIC about a year ago, in response to the recent economic crisis.

The NAIC declined to adopt the DTA proposal on an accelerated, emergency basis, but it ended up considering the proposal quickly through its regular SSAP revision process.

During discussions about the proposal, “the primary issue was finding the appropriate amount of conservatism in the calculation of an insurer’s admissible deferred tax assets,” the NAIC says in an announcement of the SSAP change.

U.S. insurance regulators have required that deferred tax assets and deferred tax liabilities be recognized in statutory financial statements since 2001, and they have used an admissibility formula to discount the value of the DTAs.

“With the adopted change, the amount of deferred income tax assets is still significantly limited, but some of the overconservatism has been reduced,” NAIC officials say.

The change will apply to insurers’ year-end 2009 statutory financial statements, and insurers must disclose the effect of the change in the notes accompanying their financial statements.