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NAIC Working Group Approves COVID-19 Flexibility Accounting Rules

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A panel of state insurance regulators has issued accounting guidelines that insurers can use to be nice to customers and borrowers hurt by COVID-19-related disruption.

The panel, the Statutory Accounting Principles Working Group, is part of the National Association of Insurance Commissioners (NAIC).

The working group has adopted three interpretations that allow for temporary exceptions from the usual problem reporting rules.


  • Links to the new accounting interpretations are available here, under the Related Documents tab.
  • An earlier article about the interpretations is available here.

The new NAIC Statements of Statutory Accounting Principles, or SSAPs, are:

  • Interpretation 20-02T: This interpretation affects accounting for delays in collecting insurance premiums in U.S. jurisdictions that are disrupted by the COVID-19 pandemic.
  • Interpretation 20-03T: Many insurers have large investments in loans, and in pools of loans. This interpretation lets insurers give borrowers affected by COVID-19 disruption extra time to make payments without classifying the changes in a loan’s terms as troubled debt restructuring.
  • Interpretation 20-04T: Many insurers have large investments in mortgage loans, securities backed by mortgage loans, affiliates that invest in mortgages, and shares of stock issued by stock companies that make mortgage loans. This interpretation applies to insurers that give borrowers affected by COVID-19 disruption extra time to make their mortgage payments.

The interpretations apply for flexibility that insurers provide, due to COVID-19-related disruption, from Jan. 1, 2020, through June 30, 2020.

Under the interpretations, insurers can provide temporary flexibility, such as a 90-day premium grace period, without recording an impairment.

An insurer will still have to record an impairment if it sells a loan or loan-backed security affected by the COVID-19 disruption, or if policyholders fail to pay their premiums after the grace periods are over.

The working group notes in the draft of the interpretation for COVID-19 premium grace periods that it provided a similar premium grace period interpretation, but for just 60 days, for major hurricanes, such as Hurricane Katrina.

“This recommendation is for a longer period than the extensions that have been granted in the past as COVID-19 is considered a nationally significant event due to the expected overall impact to the U.S. economy,” according to the comment in the draft.

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