Permitted Practices for Accounting

A permitted practice is an accounting practice that departs from the NAIC Accounting Practices and Procedures Manual and state prescribed accounting practices. Upon receipt of a permitted accounting practice request by a company domiciled within the state, the insurance department shall provide an email notification to the Deputy Commissioner (or designee) to each of the states, the District of Columbia, and the four U.S. territories if the company is licensed within that state/region. The domiciliary state shall also include the NAIC on this notification.

The domiciliary state regulatory officials have the sole authority to approve or disapprove an insurer’s request for a permitted accounting practice. The intent of the policy statement on permitted accounting practices is to provide notification of granted permitted accounting practices to other states in which an insurer is licensed. Proactive notification encourages communication between state insurance regulators who share a common interest in the solvency of insurance companies writing business in their state.

The notification of the permitted practice is to be communicated through changes made to the Examination Tracking System.  After the Department of Insurance receives a request from an insurer for a permitted accounting practice, the domiciliary regulatory authority should enter the request into the NAIC Exam Tracking System (ETS). The regulatory authority will need to provide the following information: 

• Domestic state
• The name of the insurer requesting a permitted accounting practice
• The nature and a clear description of the permitted accounting practice request.
• Whether the permitted accounting practice is a recurring practice from the prior year.
• The projected impact of the permitted accounting practice on each financial statement 
  account(s) affected.

      To access Permitted Practices

To access the Permitted Practices System:

• On the Company Search screen, search for and place a check in the box next to the desired company. Then go to the Categories screen and click the Permitted Practices for Accounting link

Calling a New Permitted Practice

1. Follow the steps for a Company/Firm Search.

2. Click on the permitted practice link

3. Click the New button

Complete the following Information:

• Requested Permitted Accounting Practice Description
• Departure from NAIC AP&P
• Was the permitted practice granted for the prior year
• Financial Statement Filing Date
• Explanation for providing less than 30 days advance notice
• Financial Statement line impact and amount
• Total Financial impact to capital and surplus of all approved permitted accounting practices

1. Click on Reset to clear the screen

2. Click on the Summary button to review completed information

3. Click on Continue

4. Click on Exit to go back to the permitted practices screen

NOTE: After clicking on the summary button, if any of the fields are not completed a notification screen will display.  It will list all the fields that need to be populated.

1. Access Permitted Practice by following the Company/Firm Search instructions.

2. Click the radio button next to the permitted practice you want to update, and click the Update button. 

3. Type in the information that needs to be updated.

4. ONLY IN THE UPDATED VIEW: There is also an option for other comments. 

5. Click on Reset to clear the screen

6. Click on Summary

7. Click Send

Viewing a New Permitted Practice

1. Access Permitted Practices by following the Company/Firm Search instructions.

2. A list of Permitted Practices will be displayed.

3. Click the radio button next to the Permitted Practice you want to view, then click the View button. The Permitted Practice Summary Detail Report page will display.

4. Click the exit button to go back to the list of Permitted Practices for the selected company.

The Permitted Accounting Practices Snapshot Report lists all permitted accounting practices issued.  You may search for permitted accounting practices by Domiciliary State and Financial Statement Filing Date.

1. Under the Tools tab, select Summary Reports.

2. Select Permitted Accounting Practices Snapshot  under the Financial Analysis / Examination section of the page.  

3. The Permitted Accounting Practices  Report Criteria screen will be displayed.  On the page, select from the following criteria:

• Domiciliary State 
• Financial Statement Filing Date

*If the criteria is left blank it will return all submitted permitted practices

4. Click the drop down arrow to sort by:

• Calling State
• NAIC Cocode
• Company Name
• Group Code
• Filing Date
• Status
• Expiration Date
• Recurring

5. Click on the Submit button  

6. The report contains the following fields:

• Practice Number
• NAIC Cocode
• State
• Company Name
• Group Code
• Financial Statement Filing Date
• Identification of specific SSAP Ref (Statements of Statutory Accounting Principles) or state prescribed practice
• Short Description of permitted accounting practice
• Domiciliary state permitted practice contact
• Pending/Approved
• Expiration Date
• Recurring Yes/No

7. To save the report, select the appropriate option from the File menu.

8. To return to the Summary reports page close your browser window. .

9. To perform another search or navigate to a different application within iSite+, select the appropriate link at the top of the Summary Reports page.