Rev. Proc. 2023-10: Insurance companies, unpaid loss discount factors for 2022 accident year

IRS Rev. Proc. 2023-10 prescribing loss payment patterns for 2022 determination year and discount factors for 2022 accident year

Insurance companies, unpaid loss discount factors for 2022 accident year

The IRS today released an advance version of Rev. Proc. 2023-10 [PDF 216 KB] prescribing the loss payment patterns for the 2022 determination year and the discount factors for the 2022 accident year for use by insurance companies in computing discounted unpaid losses under section 846 and discounted estimated salvage recoverable under section 832.

Rev. Proc. 2023-10 also provides, for convenience, discount factors for losses incurred in the 2022 accident year and earlier accident years for use in taxable years beginning in 2022. The discount factors for accident years before 2022 were prescribed in earlier revenue procedures (e.g., Rev. Proc. 2021-54 [PDF 846 KB]).

Rev. Proc. 2023-10 provides that the discount factors for losses incurred in accident year 2022 are determined by using the applicable interest rate for 2022 under section 846(c), which is 2.67% compounded semiannually. There are exceptions for the discount factors for long-tail lines of business provided for tax years beginning in 2032, which are computed using discount factors applicable to multiple accident years. All discount factors are determined by assuming all loss payments occur in the middle of the calendar year. 


The discount factors are determined pursuant to section 846—a provision of the Code that was amended by the 2017 U.S. tax law (Pub. L. No. 115-97), the law that is commonly referred to as the “Tax Cuts and Jobs Act” (TCJA)—and the final regulations under section 846 as published in June 2019. Read TaxNewsFlash


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