IRS Releases Annual Discount Factors for Insurance Companies
The IRS recently released Rev. Proc. 2020-48. The annual revenue procedure provides discounting factors for loss reserves and anticipated salvage and subrogation. Within the revenue procedure are detailed tables providing the factors for each line of business.
The revenue procedure prescribes 2020 factors for discounting unpaid losses under Internal Revenue Code (IRC) Section 846 and estimated salvage recoverable under IRC §832. The factors are determined using the applicable interest rate under IRC §846(c) and payment patterns determined under IRC §846(d). In addition, discount factors are provided for insurance companies using the composite method under Notice 88-100.
If you have questions about loss reserve or salvage and subrogation discounting, contact your BKD Trusted Advisor™ or submit the Contact Us form below.