U.S. statutory accounting is defined by laws and practices prescribed and permitted by the individual states and the Accounting Practices and Procedures Manual. NAMIC members file statutory accounting financial statements on an individual legal-entity basis quarterly and annually. The annual independent audit opinion on these financial statements is filed in accordance with laws and regulations of the state where the insurer is based.
Regulatory accounting is used in different industries by regulators to communicate information on the companies they regulate. Statutory accounting is designed for regulatory use with the primary objective to protect policyholders. The three underlying principles to statutory accounting are conservatism, consistency, and comparability. The current requirements have many baseline requirements that all insurers are subject to, and have a significant degree of specialized rules by major product types, i.e., life, health, and property/casualty.
The statutory accounting model is generally more conservative than U.S. GAAP and works in concert with other regulatory tools, most notably, risk-based capital.
NAMIC supports the development of high-quality accounting standards, which should be cost effective to apply; result in measures that reflect the economic model used by the business; and used for both general purpose and regulatory financial reporting.