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IRS Issues Loss Payment Patterns, Discount Factors for 2016

NOV. 30, 2016

Rev. Proc. 2016-58; 2016-51 I.R.B. 1

DATED NOV. 30, 2016
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Areas/Tax Topics
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2016-23436
  • Tax Analysts Electronic Citation
    2016 TNT 231-11
Citations: Rev. Proc. 2016-58; 2016-51 I.R.B. 1

Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.201: Rulings and determination letters.

(Also: Part I, Sections 846; 1.846-1.)

SECTION 1. PURPOSE

This revenue procedure prescribes the loss payment patterns and discount factors for the 2016 accident year. These factors will be used to compute discounted unpaid losses under § 846 of the Internal Revenue Code. See Rev. Proc. 2012-44, 2012-49 I.R.B. 645, for background concerning the loss payment patterns and application of the discount factors.

SECTION 2. SCOPE

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

SECTION 3. TABLES OF DISCOUNT FACTORS

.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2016. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2016, which is 1.56 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 unpaid losses on the resulting line of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2010 annual statement. See Rev. Proc. 2012-44, 2012-49 I.R.B. 645, section 2, for additional background on discounting under § 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 Tables

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 99.2290 percent to discount unpaid losses incurred in this line of business in the 2016 accident year and that are outstanding at the end of the 2016 and later taxable years.

Taxpayers that use the composite method of Notice 88-100 should use 99.2290 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2016 taxable year.

 

                          Auto Physical Damage

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       90.2657      90.2657       9.7343     9.6535     99.1701

 

   2017       99.7478       9.4822       0.2522     0.2483     98.4669

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2018 and later years     0.1261       0.1261     0.1251     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2018 taxable year.

 

 

                Commercial Auto/Truck Liability/Medical

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       25.7034      25.7034      74.2966    71.8363     96.6886

 

   2017       48.2664      22.5629      51.7336    50.2188     97.0718

 

   2018       67.8834      19.6171      32.1166    31.2327     97.2479

 

   2019       82.0630      14.1795      17.9370    17.4302     97.1744

 

   2020       90.4161       8.3532       9.5839     9.2840     96.8715

 

   2021       94.6293       4.2132       5.3707     5.1830     96.5045

 

   2022       97.0203       2.3910       2.9797     2.8543     95.7897

 

   2023       98.2283       1.2081       1.7717     1.6814     94.9023

 

   2024       98.6653       0.4370       1.3347     1.2672     94.9441

 

   2025       98.8635       0.1982       1.1365     1.0872     95.6662

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     0.1982       0.9382     0.9044     96.3940

 

   2027                     0.1982       0.7400     0.7187     97.1264

 

   2028                     0.1982       0.5417     0.5302     97.8602

 

   2029                     0.1982       0.3435     0.3386     98.5845

 

   2030 and later years     0.1982       0.1453     0.1441     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 97.0950 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

                               Composite

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       39.5281      39.5281      60.4719    57.8180     95.6113

 

   2017       62.0267      22.4986      37.9733    36.0465     94.9259

 

   2018       73.7017      11.6750      26.2983    24.8432     94.4666

 

   2019       80.0846       6.3830      19.9154    18.7981     94.3901

 

   2020       85.7818       5.6971      14.2182    13.3500     93.8935

 

   2021       90.2809       4.4992       9.7191     9.0241     92.8498

 

   2022       91.9588       1.6778       8.0412     7.4740     92.9464

 

   2023       92.9722       1.0134       7.0278     6.5693     93.4763

 

   2024       94.0835       1.1113       5.9165     5.5519     93.8371

 

   2025       94.7469       0.6634       5.2531     4.9700     94.6094

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     0.6634       4.5898     4.3790     95.4073

 

   2027                     0.6634       3.9264     3.7788     96.2399

 

   2028                     0.6634       3.2631     3.1692     97.1241

 

   2029                     0.6634       2.5997     2.5502     98.0937

 

   2030 and later years     0.6634       1.9364     1.9214     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 96.4927 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

                            Fidelity/Surety

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       22.8449      22.8449      77.1551    75.5562     97.9277

 

   2017       55.8585      33.0137      44.1415    43.4648     98.4669

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2018 and later years    22.0707      22.0707    21.9006     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2018 taxable year.

 

 

                  Financial Guaranty/Mortgage Guaranty

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016        6.2515       6.2515      93.7485    91.7295     97.8464

 

   2017       43.0154      36.7639      56.9846    56.1110     98.4669

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2018 and later years    28.4923      28.4923    28.2726     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2018 taxable year.

 

 

                       International (Composite)

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       39.5281      39.5281      60.4719    57.8180     95.6113

 

   2017       62.0267      22.4986      37.9733    36.0465     94.9259

 

   2018       73.7017      11.6750      26.2983    24.8432     94.4666

 

   2019       80.0846       6.3830      19.9154    18.7981     94.3901

 

   2020       85.7818       5.6971      14.2182    13.3500     93.8935

 

   2021       90.2809       4.4992       9.7191     9.0241     92.8498

 

   2022       91.9588       1.6778       8.0412     7.4740     92.9464

 

   2023       92.9722       1.0134       7.0278     6.5693     93.4763

 

   2024       94.0835       1.1113       5.9165     5.5519     93.8371

 

   2025       94.7469       0.6634       5.2531     4.9700     94.6094

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     0.6634       4.5898     4.3790     95.4073

 

   2027                     0.6634       3.9264     3.7788     96.2399

 

   2028                     0.6634       3.2631     3.1692     97.1241

 

   2029                     0.6634       2.5997     2.5502     98.0937

 

   2030 and later years     0.6634       1.9364     1.9214     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 96.4927 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

             Medical Professional Liability -- Claims-Made

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016        6.3462       6.3462      93.6538    89.1520     95.1953

 

   2017       23.0958      16.7496      76.9042    73.6651     95.7881

 

   2018       41.6827      18.5868      58.3173    56.0830     96.1686

 

   2019       56.5267      14.8440      43.4733    41.9985     96.6076

 

   2020       71.2882      14.7615      28.7118    27.7775     96.7458

 

   2021       82.3023      11.0141      17.6977    17.1111     96.6856

 

   2022       86.5143       4.2120      13.4857    13.1334     97.3871

 

   2023       91.1422       4.6279       8.8578     8.6744     97.9290

 

   2024       94.8664       3.7242       5.1336     5.0566     98.4989

 

   2025       97.5408       2.6745       2.4592     2.4402     99.2290

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026 and later years     2.4592           --         --     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

              Medical Professional Liability -- Occurrence

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016        1.2044       1.2044      98.7956    91.6674     92.7849

 

   2017        4.3376       3.1332      95.6624    89.9398     94.0180

 

   2018       11.8161       7.4785      88.1839    83.8063     95.0358

 

   2019       24.7088      12.8928      75.2912    72.1207     95.7891

 

   2020       42.3863      17.6774      57.6137    55.4311     96.2115

 

   2021       57.1600      14.7738      42.8400    41.4072     96.6556

 

   2022       68.9797      11.8196      31.0203    30.1417     97.1676

 

   2023       82.4247      13.4450      17.5753    17.0624     97.0618

 

   2024       86.7084       4.2837      13.2916    13.0116     97.8935

 

   2025       91.6701       4.9617       8.3299     8.2144     98.6127

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026 and later years     4.9617       3.3683     3.3423     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

                         Miscellaneous Casualty

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       69.0731      69.0731      30.9269    30.3590     98.1638

 

   2017       85.5169      16.4438      14.4831    14.2610     98.4669

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2018 and later years     7.2415       7.2415     7.1857     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2018 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

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       60.9719      60.9719      39.0281    37.9001     97.1096

 

   2017       82.9059      21.9341      17.0941    16.3869     95.8627

 

   2018       89.2783       6.3724      10.7217    10.2205     95.3261

 

   2019       91.5605       2.2822       8.4395     8.0800     95.7413

 

   2020       94.4255       2.8649       5.5745     5.3189     95.4145

 

   2021       96.5899       2.1644       3.4101     3.2206     94.4441

 

   2022       97.6023       1.0124       2.3977     2.2506     93.8655

 

   2023       98.0034       0.4011       1.9966     1.8815     94.2357

 

   2024       98.3410       0.3376       1.6590     1.5706     94.6737

 

   2025       98.5727       0.2317       1.4273     1.3617     95.3998

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     0.2317       1.1957     1.1495     96.1346

 

   2027                     0.2317       0.9640     0.9340     96.8791

 

   2028                     0.2317       0.7324     0.7151     97.6355

 

   2029                     0.2317       0.5007     0.4928     98.4099

 

   2030 and later years     0.2317       0.2691     0.2670     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 96.9112 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

                        Other (Including Credit)

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       54.6589      54.6589      45.3411    44.6328     98.4380

 

   2017       84.2314      29.5725      15.7686    15.5268     98.4669

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2018 and later years     7.8843       7.8843     7.8235     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2018 taxable year.

 

 

                     Other Liability -- Claims-Made

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016        7.4270       7.4270      92.5730    87.8256     94.8717

 

   2017       25.2808      17.8538      74.7192    71.2032     95.2943

 

   2018       44.2108      18.9301      55.7892    53.2368     95.4250

 

   2019       56.4956      12.2848      43.5044    41.6871     95.8227

 

   2020       69.2838      12.7883      30.7162    29.4498     95.8772

 

   2021       77.6662       8.3823      22.3338    21.4618     96.0953

 

   2022       83.1572       5.4910      16.8428    16.2629     96.5568

 

   2023       88.1777       5.0205      11.8223    11.4571     96.9106

 

   2024       93.1315       4.9539       6.8685     6.6435     96.7242

 

   2025       92.9490      -0.1826       7.0510     6.9311     98.2990

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     3.2639       3.7871     3.7499     99.0184

 

   2027 and later years     3.2639       0.5232     0.5192     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.0369 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

                     Other Liability -- Occurrence

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       10.0721      10.0721      89.9279    84.0612     93.4762

 

   2017       24.3995      14.3274      75.6005    70.9339     93.8272

 

   2018       37.3366      12.9372      62.6634    59.0027     94.1583

 

   2019       52.4142      15.0776      47.5858    44.7284     93.9954

 

   2020       64.3437      11.9295      35.6563    33.4040     93.6834

 

   2021       73.7950       9.4512      26.2050    24.4004     93.1136

 

   2022       79.7756       5.9807      20.2244    18.7539     92.7295

 

   2023       84.0963       4.3206      15.9037    14.6923     92.3828

 

   2023       85.6878       1.5915      14.3122    13.3176     93.0508

 

   2025       86.9224       1.2346      13.0776    12.2812     93.9100

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     1.2346      11.8431    11.2286     94.8119

 

   2027                     1.2346      10.6085    10.1597     95.7689

 

   2028                     1.2346      9.3740      9.0740     96.8001

 

   2029                     1.2346      8.1394      7.9714     97.9360

 

   2030 and later years     1.2346      6.9048      6.8516     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 96.2276 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

                Private Passenger Auto Liability/Medical

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       42.9881      42.9881      57.0119    55.6793     97.6626

 

   2017       71.9931      29.0051      28.0069    27.3175     97.5386

 

   2018       84.8250      12.8318      15.1750    14.8121     97.6085

 

   2019       92.3500       7.5251       7.6500     7.4597     97.5123

 

   2020       96.2665       3.9165       3.7335     3.6291     97.2044

 

   2021       97.9880       1.7214       2.0120     1.9509     96.9616

 

   2022       98.7958       0.8078       1.2042     1.1672     96.9294

 

   2023       99.2445       0.4487       0.7555     0.7332     97.0542

 

   2024       99.4543       0.2097       0.5457     0.5333     97.7195

 

   2025       99.6370       0.1827       0.3630     0.3575     98.4721

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026 and later years     0.1827       0.1803     0.1789     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

                   Products Liability -- Claims-Made

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016        4.5270       4.5270      95.4730    88.8146     93.0259

 

   2017       16.0134      11.4865      83.9866    78.6245     93.6155

 

   2018       45.1313      29.1179      54.8687    50.5069     92.0504

 

   2019       39.2459      -5.8854      60.7541    57.2259     94.1927

 

   2020       44.8357       5.5898      55.1643    52.4854     95.1438

 

   2021       72.1615      27.3258      27.8385    25.7661     92.5555

 

   2022       80.4448       8.2834      19.5552    17.8203     91.1284

 

   2023       73.2957      -7.1491      26.7043    25.3029     94.7525

 

   2024       87.4824      14.1866      12.5176    11.4008     91.0781

 

   2025       87.7500       0.2677      12.2500    11.3089     92.3180

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     0.2677      11.9823    11.2156     93.6014

 

   2027                     0.2677      11.7147    11.1208     94.9310

 

   2028                     0.2677      11.4470    11.0246     96.3099

 

   2029                     0.2677      11.1793    10.9268     97.7413

 

   2030 and later years     0.2677      10.9117    10.8275     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 95.8264 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

                    Products Liability -- Occurrence

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016        7.1936       7.1936      92.8064    86.0592     92.7297

 

   2017       16.9555       9.7619      83.0445    77.5639     93.4004

 

   2018       28.3624      11.4069      71.6376    67.2784     93.9149

 

   2019       39.7945      11.4321      60.2055    56.8070     94.3552

 

   2020       54.3906      14.5961      45.6094    42.9837     94.2430

 

   2021       60.9060       6.5154      39.0940    37.0882     94.8693

 

   2022       67.7760       6.8700      32.2240    30.7434     95.4053

 

   2023       75.7119       7.9359      24.2881    23.2254     95.6247

 

   2024       79.5966       3.8847      20.4034    19.6728     96.4195

 

   2025       83.9430       4.3464      16.0570    15.5996     97.1513

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     4.3464      11.7107    11.4628     97.8837

 

   2027                     4.3464       7.3643     7.2615     98.6044

 

   2028 and later years     4.3464       3.0179     2.9947     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 98.2573 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

            Reinsurance -- Nonproportional Assumed Property

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       20.1003      20.1003      79.8997    77.4053     96.8780

 

   2017       59.2833      39.1830      40.7167    39.1254     96.0916

 

   2018       73.0867      13.8034      26.9133    25.8251     95.9565

 

   2019       80.3675       7.2808      19.6325    18.8905     96.2208

 

   2020       87.7278       7.3603      12.2722    11.7677     95.8895

 

   2021       94.4454       6.7175       5.5546     5.1816     93.2838

 

   2022       96.5143       2.0689       3.4857     3.1774     91.1552

 

   2023       97.9468       1.4326       2.0532     1.7833     86.8559

 

   2024       97.4560      -0.4909       2.5440     2.3058     90.6356

 

   2025       97.0652      -0.3908       2.9348     2.7356     93.2116

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     0.1836       2.7512     2.5932     94.2578

 

   2027                     0.1836       2.5675     2.4486     95.3671

 

   2028                     0.1836       2.3839     2.3017     96.5527

 

   2029                     0.1836       2.2003     2.1526     97.8320

 

   2030 and later years     0.1836       2.0166     2.0011     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 96.0251 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

            Reinsurance -- Nonproportional Assumed Liability

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016        3.4987       3.4987      96.5013    89.5392     92.7855

 

   2017       23.2170      19.7183      76.7830    71.0645     92.5524

 

   2018       43.7483      20.5313      56.2517    51.4823     91.5213

 

   2019       38.9131      -4.8352      61.0869    57.1582     93.5686

 

   2020       47.9298       9.0167      52.0702    48.9631     94.0328

 

   2021       80.0315      32.1017      19.9685    17.3758     87.0160

 

   2022       76.5053      -3.5292      23.4947    21.2005     90.2350

 

   2023       78.1701       1.6649      21.8299    19.8534     90.9460

 

   2024       80.0717       1.9015      19.9283    18.2468     91.5621

 

   2025       79.8791      -0.1926      20.1209    18.7255     93.0650

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     1.1246      18.9963    17.8843     94.1462

 

   2027                     1.1246      17.8717    17.0300     95.2901

 

   2028                     1.1246      16.7471    16.1623     96.5079

 

   2029                     1.1246      15.6225    15.2811     97.8145

 

   2030 and later years     1.1246      14.4979    14.3861     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 95.9885 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

         Reinsurance -- Nonproportional Assumed Financial Lines

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016        1.5423       1.5423      98.4577    93.0298     94.4871

 

   2017       20.9273      19.3850      79.0727    74.9455     94.7805

 

   2018       30.4705       9.5433      69.5295    66.4972     95.6390

 

   2019       46.3043      15.8337      53.6957    51.5778     96.0558

 

   2020       51.8464       5.5421      48.1536    46.7973     97.1834

 

   2021       72.7869      20.9405      27.2131    26.4241     97.1007

 

   2022       82.0967       9.3097      17.9033    17.4542     97.4915

 

   2023       89.2630       7.1664      10.7370    10.5045     97.8346

 

   2024       95.3692       6.1062       4.6308     4.5147     97.4934

 

   2025       96.7995       1.4303       3.2005     3.1437     98.2266

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     1.4303       1.7702     1.7513     98.9364

 

   2027 and later years     1.4303       0.3399     0.3372     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 98.9741 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

          Special Property (Fire, Allied Lines, Inland Marine,

 

                    Earthquake, Burglary and Theft)

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       55.6145      55.6145      44.3855    43.8006     98.6824

 

   2017       89.3328      33.7182      10.6672    10.5037     98.4669

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2018 and later years     5.3336       5.3336     5.2925     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2018 taxable year.

 

 

                                Warranty

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       85.4101      85.4101      14.5899    14.4669     99.1571

 

   2017       99.5388      14.1287       0.4612     0.4541     98.4669

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2018 and later years     0.2306       0.2306     0.2288     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 99.2290 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2018 taxable year.

 

 

                         Workers' Compensation

 

 ______________________________________________________________________

 

 

            Estimated                             Discounted

 

            Cumulative   Estimated     Unpaid     Unpaid

 

            Losses       Losses Paid   Losses at  Losses at    Discount

 

            Paid         Each Year     Year End   Year End     Factors

 

 Tax Year   (%)          (%)           (%)        (%)          (%)

 

 ______________________________________________________________________

 

 

   2016       21.8973      21.8973      78.1027    72.4793     92.8001

 

   2017       43.4962      21.5989      56.5038    51.8433     91.7519

 

   2018       56.0061      12.5099      43.9939    40.0450     91.0240

 

   2019       63.5544       7.5482      36.4456    33.0628     90.7181

 

   2020       68.9880       5.4337      31.0120    28.1027     90.6188

 

   2021       73.9567       4.9687      26.0433    23.5338     90.3641

 

   2022       76.0580       2.1013      23.9420    21.7833     90.9836

 

   2023       77.6365       1.5785      22.3635    20.5323     91.8119

 

   2024       80.1194       2.4828      19.8806    18.3505     92.3034

 

   2025       81.3456       1.2262      18.6544    17.4010     93.2810

 

 

 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 2016 accident year and that are outstanding at

 

 the end of the tax year shown.

 

 

   2026                     1.2262      17.4281    16.4367     94.3111

 

   2027                     1.2262      16.2019    15.4573     95.4044

 

   2028                     1.2262      14.9757    14.4627     96.5746

 

   2029                     1.2262      13.7494    13.4525     97.8408

 

   2030 and later years     1.2262      12.5232    12.4266     99.2290

 

 

 Taxpayers that use the composite method of Notice 88-100 should use

 

 96.0431 percent to discount unpaid losses incurred in this line of

 

 business in 2016 and prior years and that are outstanding at the end

 

 of the 2026 taxable year.

 

 

SECTION 4. DRAFTING INFORMATION

The principal author of this revenue procedure is Sharon Y. Horn of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure contact Ms. Horn at (202) 317-4426 (not a toll free call).

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Areas/Tax Topics
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2016-23436
  • Tax Analysts Electronic Citation
    2016 TNT 231-11
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