IRS Releases 2021 Discount Factors for Insurance Companies
January 04, 2022
By Barbara Pena
On December 31, 2021, the IRS issued a draft of Revenue Procedure 2021-54 which prescribes the discount factors to be used by insurance companies to compute discounted unpaid losses and discounted salvage recoverable for the 2021 accident year. For convenience, the revenue procedure also includes discount factors for losses incurred in the 2020 accident year and prior. On December 27, 2021, the IRS released a corrected document which corrects errors on Table 4. The corrected Revenue Procedure can be found in Internal Revenue Bulletin No. 2021-52.
The revenue procedure is applicable to all insurance companies required to discount unpaid losses under IRC Sec. 846 and all insurance companies required to discount estimated salvage recoverable under IRC Sec. 832.
In addition, EisnerAmper has created a tool to help you calculate your discounted loss reserves. Access our easy-to-use (and FREE) template by filling out this brief form – then you’ll be able to simply input your loss reserves by accident year and line of business; our tool will do the rest.