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IRS Issues Loss Payment Patterns, Discount Factors For 2008 And Corrects 2006, 2007 Discount Factors.

NOV. 19, 2008

Rev. Proc. 2008-70; 2008-49 I.R.B. 1240

DATED NOV. 19, 2008
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference
    For Rev. Proc. 2008-10, 2008-3 I.R.B. 290, see Doc 2007-27664 or

    2007 TNT 244-15.

    For Rev. Proc. 2007-9, 2007-1 C.B. 278, see Doc 2006-25010 or

    2006 TNT 241-11.
  • Code Sections
  • Subject Areas/Tax Topics
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2008-24474
  • Tax Analysts Electronic Citation
    2008 TNT 225-8
Citations: Rev. Proc. 2008-70; 2008-49 I.R.B. 1240

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 2008 accident year. These factors will be used for computing discounted unpaid losses under § 846 of the Internal Revenue Code. See Rev. Proc. 2008-10, 2008-3 I.R.B. 290, for background concerning the loss payment patterns and application of the discount factors. This revenue procedure also corrects the discount factors for the Composite and International (Composite) lines of business for the 2006 and 2007 accident years in Rev. Proc. 2007-9, 2007-1 C.B. 278, and Rev. Proc. 2008-10, 2008-3 I.R.B. 290, for taxpayers that use the composite method of Notice 88-100, 1988-2. C.B. 439.

SECTION 2. SCOPE

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

SECTION 3. CORRECTION OF REV. PROC. 2007-9 AND REV. PROC. 2008-10

.01 Rev. Proc. 2007-9, 2007-1 C.B. 278, prescribes the loss payment patterns and discount factors for the 2006 accident year. Rev. Proc. 2008-10, 2008-3 I.R.B. 290, prescribes the loss payment patterns and discount factors for the 2007 accident year. An error has been discovered in the composite discount factors for the 2006 and 2007 accident years that were determined for the Composite and International (Composite) lines of business for taxpayers that use the composite method of Notice 88-100, which is used for computing discounted unpaid losses for accident years not separately reported on the annual statement.

.02 Rev. Proc. 2007-9 as corrected for the Composite line of business provides: "Taxpayers that use the composite method of Notice 88-100 should use 90.1284 percent to discount unpaid losses incurred in this line of business in 2006 and prior years that are outstanding at the end of the 2016 taxable year."

.03 Rev. Proc. 2007-9 as corrected for the International (Composite) line of business provides: "Taxpayers that use the composite method of Notice 88-100 should use 90.1284 percent to discount unpaid losses incurred in this line of business in 2006 and prior years that are outstanding at the end of the 2016 taxable year."

.04 Rev. Proc. 2008-10 as corrected for the Composite line of business provides: "Taxpayers that use the composite method of Notice 88-100 should use 92.4923 percent to discount unpaid losses incurred in this line of business in 2007 and prior years that are outstanding at the end of the 2017 taxable year."

.05 Rev. Proc. 2008-10 as corrected for the International (Composite) line of business provides: "Taxpayers that use the composite method of Notice 88-100 should use 92.4923 percent to discount unpaid losses incurred in this line of business in 2007 and prior years that are outstanding at the end of the 2017 taxable year."

SECTION 4. TABLES OF DISCOUNT FACTORS

.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2008. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2008, which is 4.06 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 the unpaid losses on the affected lines of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2005 annual statement. See Rev. Proc. 2008-10, 2008-3 I.R.B. 290, section 2, for additional background on discounting under section 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.

 

Tables of Factors to be Used to Discount

 

Unpaid Losses Incurred in

 

Accident Year 2008

 

 

(Interest rate: 4.06 percent)

 

 

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 98.0298 percent to discount unpaid losses incurred in this line of business in the 2008 accident year and that are outstanding at the end of the 2008 and later taxable years.

Taxpayers that use the composite method of Notice 88-100 should use 98.0298 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2008 taxable year.

Auto Physical Damage

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      89.4096        89.4096        10.5904      10.3639      97.8613

 

 2009      99.6848        10.2752        0.3152       0.3030       96.1174

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2010 and later years     0.1576         0.1576       0.1545       98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0298 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2010 taxable year.

Commercial Auto/Truck Liability/Medical

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      23.6718        23.6718        76.3282       70.1942      91.9637

 

 2009      47.5425        23.8708        52.4575       48.6936      92.8249

 

 2010      66.6847        19.1421        33.3153       31.1437      93.4816

 

 2011      81.5105        14.8258        18.4895       17.2843      93.4819

 

 2012      90.0548         8.5443         9.9452        9.2701      93.2115

 

 2013      94.7311         4.6763         5.2689        4.8762      92.5459

 

 2014      97.0602         2.3292         2.9398        2.6982      91.7820

 

 2015      98.1174         1.0572         1.8826        1.7293      91.8572

 

 2016      98.8692         0.7518         1.1308        1.0326      91.3161

 

 2017      99.1160         0.2467         0.8840        0.8228      93.0737

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 0.2467   0.6373    0.6045    94.8560

 

 2019                 0.2467   0.3906    0.3774    96.6210

 

 2020 and later years 0.2467   0.1439    0.1410    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 95.5540 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Composite

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      34.7004        34.7004        65.2996      59.2808      90.7829

 

 2009      58.6076        23.9072        41.3924      37.2999      90.1131

 

 2010      71.7608        13.1532        28.2392      25.3968      89.9346

 

 2011      81.4987         9.7379        18.5013      16.4943      89.1521

 

 2012      87.8488         6.3501        12.1512      10.6863      87.9440

 

 2013      91.4226         3.5739         8.5774       7.4744      87.1415

 

 2014      93.4057         1.9831         6.5943       5.7549      87.2720

 

 2015      94.2280         0.8222         5.7720       5.1498      89.2206

 

 2016      95.4875         1.2595         4.5125       4.0741      90.2843

 

 2017      96.3560         0.8685         3.6440       3.3535      92.0287

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 0.8685   2.7754    2.6036    93.8109

 

 2019                 0.8685   1.9069    1.8233    95.6199

 

 2020                 0.8685   1.0383    1.0114    97.4044

 

 2021 and later years 0.8685   0.1698    0.1664    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.3096 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Fidelity/Surety

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      25.2328        25.2328        74.7672      71.0916      95.0839

 

 2009      61.1025        35.8698        38.8975      37.3872      96.1174

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2010 and later years 19.4487  19.4487   19.0655   98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0298 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2010 taxable year.

Financial Guaranty/Mortgage Guaranty

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008       7.7824         7.7824        92.2176      88.2568      95.7050

 

 2009      62.1390        54.3565        37.8610      36.3911      96.1174

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2010 and later years 18.9305  18.9305   18.5575   98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0298 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2010 taxable year.

International (Composite)

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      34.7004        34.7004        65.2996      59.2808      90.7829

 

 2009      58.6076        23.9072        41.3924      37.2999      90.1131

 

 2010      71.7608        13.1532        28.2392      25.3968      89.9346

 

 2011      81.4987         9.7379        18.5013      16.4943      89.1521

 

 2012      87.8488         6.3501        12.1512      10.6863      87.9440

 

 2013      91.4226         3.5739         8.5774       7.4744      87.1415

 

 2014      93.4057         1.9831         6.5943       5.7549      87.2720

 

 2015      94.2280         0.8222         5.7720       5.1498      89.2206

 

 2016      95.4875         1.2595         4.5125       4.0741      90.2843

 

 2017      96.3560         0.8685         3.6440       3.3535      92.0287

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 0.8685   2.7754    2.6036    93.8109

 

 2019                 0.8685   1.9069    1.8233    95.6199

 

 2020                 0.8685   1.0383    1.0114    97.4044

 

 2021 and later years 0.8685   0.1698    0.1664    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.3096 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Medical Malpractice -- Claims-Made

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008       4.9425         4.9425        95.0575      85.0276      89.4485

 

 2009      19.9369        14.9944        80.0631      73.1839      91.4078

 

 2010      44.3489        24.4120        55.6511      51.2525      92.0962

 

 2011      64.8374        20.4885        35.1626      32.4331      92.2375

 

 2012      80.2530        15.4156        19.7470      18.0245      91.2770

 

 2013      85.7907         5.5377        14.2093      13.1072      92.2442

 

 2014      91.2722         5.4815         8.7278       8.0478      92.2082

 

 2015      93.3314         2.0593         6.6686       6.2739      94.0812

 

 2016      96.1257         2.7942         3.8743       3.6782      94.9374

 

 2017      97.6538         1.5281         2.3462       2.2687      96.6961

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018 and later years 1.5281   0.8182    0.8021    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0440 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Medical Malpractice -- Occurrence

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008       1.5878         1.5878        98.4122      82.1817      83.5076

 

 2009       4.4720         2.8842        95.5280      82.5760      86.4417

 

 2010      17.7738        13.3018        82.2262      72.3595      88.0005

 

 2011      35.8814        18.1076        64.1186      56.8257      88.6260

 

 2012      52.9447        17.0633        47.0553      41.7266      88.6757

 

 2013      68.4348        15.4901        31.5652      27.6193      87.4993

 

 2014      79.5616        11.1268        20.4384      17.3902      85.0861

 

 2015      85.8198         6.2582        14.1802      11.7123      82.5961

 

 2016      90.1267         4.3069         9.8733       7.7943      78.9437

 

 2017      90.3701         0.2434         9.6299       7.8625      81.6469

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 0.2434   9.3865    7.9335    84.5197

 

 2019                 0.2434   9.1431    8.0073    87.5770

 

 2020                 0.2434   8.8998    8.0841    90.8352

 

 2021                 0.2434   8.6564    8.1641    94.3126

 

 2022 and later years 0.2434   8.4130    8.2473    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 86.1528 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Miscellaneous Casualty

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      72.9064        72.9064        27.0936      26.1964      96.6888

 

 2009      93.5836        20.6771         6.4164       6.1673      96.1174

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2010 and later years 3.2082   3.2082    3.1450    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0298 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2010 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

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      52.5880        52.5880        47.4120       44.2537      93.3385

 

 2009      80.0449        27.4570        19.9551       18.0416      90.4110

 

 2010      86.1625         6.1175        13.8375       12.5336      90.5767

 

 2011      90.7452         4.5827         9.2548        8.3676      90.4137

 

 2012      93.9006         3.1555         6.0994        5.4885      89.9844

 

 2013      95.7613         1.8607         4.2387        3.8132      89.9627

 

 2014      96.8755         1.1141         3.1245        2.8315      90.6219

 

 2015      97.6715         0.7960         2.3285        2.1345      91.6659

 

 2016      98.0329         0.3615         1.9671        1.8524      94.1706

 

 2017      98.6810         0.6481         1.3190        1.2665      96.0207

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 0.6481   0.6709    0.6568    97.8997

 

 2019 and later years 0.6481   0.0228    0.0224    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 97.9053 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Other (Including Credit)

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      67.9528        67.9528        32.0472      30.8190      96.1676

 

 2009      89.4609        21.5081        10.5391      10.1299      96.1174

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2010 and later years 5.2695   5.2695    5.1657    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0298 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2010 taxable year.

Other Liability -- Claims-Made

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008       5.8796         5.8796        94.1204      83.2369      88.4367

 

 2009      18.8735        12.9938        81.1265      73.3613      90.4283

 

 2010      41.6840        22.8105        58.3160      53.0709      91.0056

 

 2011      62.5322        20.8483        37.4678      33.9583      90.6333

 

 2012      73.5207        10.9885        26.4793      24.1277      91.1189

 

 2013      82.0036         8.4829        17.9964      16.4539      91.4286

 

 2014      88.6279         6.6244        11.3721      10.3644      91.1391

 

 2015      90.7107         2.0828         9.2893       8.6605      93.2317

 

 2016      94.8439         4.1332         5.1561       4.7959      93.0145

 

 2017      96.2689         1.4249         3.7311       3.5370      94.7977

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 1.4249   2.3062    2.2270    96.5683

 

 2019 and later years 1.4249   0.8812    0.8639    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 97.0645 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Other Liability -- Occurrence

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      13.6594        13.6594        86.3406       74.5578      86.3531

 

 2009      24.8389        11.1795        75.1611       66.1806      88.0517

 

 2010      41.7792        16.9403        58.2208       51.5868      88.6055

 

 2011      58.4995        16.7203        41.5005       36.6249      88.2518

 

 2012      69.5197        11.0203        30.4803       26.8702      88.1560

 

 2013      77.7513         8.2316        22.2487       19.5641      87.9336

 

 2014      84.2243         6.4730        15.7757       13.7553      87.1929

 

 2015      83.2275        -0.9968        16.7725       15.3306      91.4032

 

 2016      88.8524         5.6249        11.1476       10.2151      91.6347

 

 2017      91.3852         2.5328         8.6148        8.0461      93.3986

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 2.5328   6.0820    5.7891    95.1836

 

 2019                 2.5328   3.5492    3.4404    96.9345

 

 2020 and later years 2.5328   1.0164    0.9964    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.7637 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Private Passenger Auto Liability/Medical

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      42.6108        42.6108        57.3892       54.0511      94.1835

 

 2009      71.5827        28.9719        28.4173       26.6915      93.9269

 

 2010      84.6947        13.1120        15.3053       14.3997      94.0826

 

 2011      92.3556         7.6610         7.6444        7.1693      93.7860

 

 2012      96.2369         3.8812         3.7631        3.5012      93.0391

 

 2013      97.9275         1.6907         2.0725        1.9187      92.5799

 

 2014      98.7719         0.8444         1.2281        1.1352      92.4394

 

 2015      99.2692         0.4973         0.7308        0.6740      92.2334

 

 2016      99.5053         0.2361         0.4947        0.4606      93.0998

 

 2017      99.6440         0.1387         0.3560        0.3378      94.8818

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 0.1387   0.2174    0.2101    96.6446

 

 2019 and later years 0.1387   0.0787    0.0772    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 97.0811 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Products Liability -- Claims-Made

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008       1.0259         1.0259        98.9741      84.7900      84.6586

 

 2009      11.7927        10.7667        88.2073      76.2088      86.3973

 

 2010      29.3642        17.5716        70.6358      61.3781      86.8939

 

 2011      55.1655        25.8012        44.8345      37.5503      83.7531

 

 2012      83.4171        28.2516        16.5829      10.2554      61.8434

 

 2013      64.8933       -18.5238        35.1067      29.5679      84.2229

 

 2014      82.3346        17.4414        17.6654      12.9765      73.4571

 

 2015      86.3986         4.0640        13.6014       9.3576      68.7991

 

 2016      76.3310       -10.0676        23.6690      20.0075      84.5305

 

 2017      78.7910         2.4600        21.2090      18.3104      86.3331

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 2.4600   18.7490   16.5444   88.2412

 

 2019                 2.4600   16.2890   14.7066   90.2855

 

 2020                 2.4600   13.8290   12.7943   92.5176

 

 2021                 2.4600   11.3691   10.8043   95.0326

 

 2022 and later years 2.4600    8.9091    8.7336   98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 89.2840 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Products Liability -- Occurrence

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008       5.0466         5.0466        94.9534      80.1653      84.4260

 

 2009      13.6935         8.6469        86.3065      74.5994      86.4354

 

 2010      28.2541        14.5606        71.7459      62.7748      87.4961

 

 2011      41.3083        13.0542        58.6917      52.0070      88.6104

 

 2012      59.3693        18.0610        40.6307      35.6944      87.8509

 

 2013      73.0717        13.7024        26.9283      23.1659      86.0279

 

 2014      74.6612         1.5895        25.3388      22.4849      88.7371

 

 2015      78.9833         4.3221        21.0167      18.9889      90.3513

 

 2016      86.1231         7.1398        13.8769      12.4765      89.9085

 

 2017      88.6931         2.5700        11.3069      10.3614      91.6379

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 2.5700   8.7369    8.1604    93.4018

 

 2019                 2.5700   6.1669    5.8701    95.1869

 

 2020                 2.5700   3.5969    3.4868    96.9378

 

 2021 and later years 2.5700   1.0269    1.0067    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.0919 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Reinsurance -- Nonproportional Assumed Property

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      12.9458         12.9458        87.0542      80.8403      92.8620

 

 2009      60.1796         47.2338        39.8204      35.9393      90.2535

 

 2010      80.8225         20.6429        19.1775      16.3406      85.2075

 

 2011      84.9430          4.1205        15.0570      12.8008      85.0155

 

 2012      85.6680          0.7250        14.3320      12.5809      87.7821

 

 2013      80.0452         -5.6229        19.9548      18.8276      94.3509

 

 2014      86.7013          6.6561        13.2987      12.8020      96.2654

 

 2015      97.2533         10.5520         2.7467       2.5578      93.1205

 

 2016      97.6721          0.4188         2.3279       2.2344      95.9820

 

 2017      98.8078          1.1357         1.1922       1.1665      97.8487

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018 and later years 1.1357   0.0564    0.0553    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.5477 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Reinsurance -- Nonproportional Assumed Liability

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      32.5917        32.5917        67.4083      54.5146      80.8723

 

 2009      33.3995         0.8078        66.6005      55.9039      83.9392

 

 2010      35.4948         2.0953        64.5052      56.0362      86.8708

 

 2011      44.0321         8.5373        55.9679      49.6024      88.6265

 

 2012      64.8299        20.7979        35.1701      30.4004      86.4383

 

 2013      66.4358         1.6059        33.5642      29.9965      89.3706

 

 2014      77.8097        11.3738        22.1903      19.6119      88.3805

 

 2015      82.4438         4.6341        17.5562      15.6809      89.3183

 

 2016      84.1944         1.7507        15.8056      14.5317      91.9406

 

 2017      87.9223         3.7279        12.0777      11.3189      93.7176

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 3.7279   8.3498    7.9757    95.5191

 

 2019                 3.7279   4.6219    4.4967    97.2900

 

 2020 and later years 3.7279   0.8940    0.8764    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.6662 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

Reinsurance -- Nonproportional Assumed Financial Lines

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008       8.4783         8.4783        91.5217      82.6377      90.2930

 

 2009      28.0475        19.5693        71.9525      66.0302      91.7692

 

 2010      60.4351        32.3875        39.5649      35.6726      90.1622

 

 2011      82.4448        22.0097        17.5552      14.6688      83.5583

 

 2012      90.2720         7.8271         9.7280       7.2799      74.8343

 

 2013      85.3168        -4.9551        14.6831      12.6301      86.0181

 

 2014      88.3777         3.0608        11.6223      10.0206      86.2186

 

 2015      89.9934         1.6157        10.0066       8.7793      87.7346

 

 2016      81.6664        -8.3269        18.3336      17.6300      96.1625

 

 2017      91.0491         9.3827         8.9509       8.7745      98.0298

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018 and later years --  --   --   98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 94.5352 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 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

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      44.5756        44.5756        55.4244      53.5639      96.6430

 

 2009      88.4263        41.8507        13.5737      13.0467      96.1174

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2010 and later years 6.7869   6.7869    6.6531    98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 98.0298 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2010 taxable year.

Workers' Compensation

           Estimated                                  Discounted

 

           Cumulative     Estimated      Unpaid       Unpaid

 

           Losses         Losses Paid    Losses at    Losses at    Discount

 

 Tax Year  Paid           Each Year      Year End     Year End     Factors

 

           (%)            (%)            (%)          (%)          (%)

 

 

 2008      19.0410        19.0410        80.9590      69.6415      86.0207

 

 2009      40.2442        21.2032        59.7558      50.8396      85.0789

 

 2010      57.1497        16.9055        42.8503      35.6584      83.2162

 

 2011      67.8601        10.7104        32.1399      26.1804      81.4579

 

 2012      75.5399         7.6797        24.4601      19.4093      79.3507

 

 2013      80.1157         4.5758        19.8843      15.5296      78.0994

 

 2014      82.1828         2.0672        17.8172      14.0513      78.8640

 

 2015      84.4045         2.2217        15.5955      12.3555      79.2248

 

 2016      85.5195         1.1150        14.4805      11.7198      80.9346

 

 2017      86.2855         0.7661        13.7145      11.4141      83.2269

 

 

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 2008 accident year and that are outstanding at the end of the tax year shown.

 2018                 0.7661   12.9484   11.0961   85.6945

 

 2019                 0.7661   12.1823   10.7651   88.3666

 

 2020                 0.7661   11.4163   10.4207   91.2795

 

 2021                 0.7661   10.6502   10.0624   94.4802

 

 2022 and later years 0.7661    9.8842    9.6894   98.0298

 

 

Taxpayers that use the composite method of Notice 88-100 should use 88.0210 percent to discount unpaid losses incurred in this line of business in 2008 and prior years and that are outstanding at the end of the 2018 taxable year.

SECTION 5. EFFECT ON OTHER DOCUMENTS

Rev. Proc. 2007-9 and Rev. Proc. 2008-10 are modified as to the composite discount factor to be used by taxpayers that use the composite method of Notice 88-100 under the Composite and International (Composite) lines of business.

DRAFTING INFORMATION

The principal author of this revenue procedure is Katherine A. Hossofsky of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Ms. Hossofsky at (202) 622-8435 (not a toll-free call).

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Cross-Reference
    For Rev. Proc. 2008-10, 2008-3 I.R.B. 290, see Doc 2007-27664 or

    2007 TNT 244-15.

    For Rev. Proc. 2007-9, 2007-1 C.B. 278, see Doc 2006-25010 or

    2006 TNT 241-11.
  • Code Sections
  • Subject Areas/Tax Topics
  • Industry Groups
    Insurance
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2008-24474
  • Tax Analysts Electronic Citation
    2008 TNT 225-8
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