New York Gov. George Pataki has signed a bill (A.11821) to bring accounting standards for the state’s domestic insurers into compliance with the National Association of Insurance Commissioners’ (NAIC) standards used in every other state.
“This legislation puts New York domestic insurers on a level playing field with domestic insurers in other states,” said Michael Murphy, American Insurance Association (AIA) assistant vice president, northeast region.
Specifically, the bill allows insurers to admit deferred tax assets (DTAs). The NAIC’s standardized accounting rules require companies to record a limited amount of DTAs in an attempt to show the benefit that will accrue when a particular asset or liability is ultimately sold or settled. The NAIC adopted this accounting system to provide a more accurate measure of an insurer’s true assets by recognizing the difference in timing between tax accounting and regulatory accounting.
“New York was the only state that did not follow the NAIC standard. By enacting this law, Governor Pataki and the Legislature have removed a disadvantage that New York domestic insurers faced,” added Murphy.
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