New Findings from Lingnan University in Risk Management Provides New Insights (The Effect of Accounting for Income Tax Uncertainty On Tax-deductible Loss Accruals for Private Insurers): Risk Management

2021 NOV 24 (NewsRx) -- By a News Reporter-Staff News Editor at Insurance Daily News -- Researchers detail new data in Risk Management. According to news reporting out of Hong Kong, People’s Republic of China, by NewsRx editors, research stated, “Little is known about the effects of accounting regulation on private insurers. In this paper, we examine the uniqueness of the tax deductibility of insurers’ loss accruals.”

Funders for this research include University of Hong Kong, Ministry of Science and Technology R.O.C, Singapore Management University, Lingnan University, Hong Kong Polytechnic University.

Our news journalists obtained a quote from the research from Lingnan University, “We find that private insurers’ overstatement of loss accruals in tax planning significantly decreases after adoption of the Statement of Statutory Accounting Principles (SSAP) 101, which mandates that insurance companies recognize and measure tax contingencies. Relative to public insurers’ loss reserve errors, those of private insurers decrease by an estimated 0.8%-1.1% of total assets, implying a forfeited tax benefit of $1.79-$4.4 million per firm, per year. We also find that the decrease is mitigated for insurers with lower IRS monitoring or in states where the insurance industry comprises a greater part of state employment.”

According to the news editors, the research concluded: “Additionally, insurers with independent boards, or those with independent, external actuaries are more responsive to the adoption of SSAP 101.”

This research has been peer-reviewed.

For more information on this research see: The Effect of Accounting for Income Tax Uncertainty On Tax-deductible Loss Accruals for Private Insurers. Journal of Risk & Insurance, 2021. Journal of Risk & Insurance can be contacted at: Wiley, 111 River St, Hoboken 07030-5774, NJ, USA. (Wiley-Blackwell - http://www.wiley.com/; Journal of Risk & Insurance - http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1539-6975)

Our news journalists report that additional information may be obtained by contacting Jiang Cheng, Lingnan University, Dept. of Finance & Insurance, Hong Kong, People’s Republic of China. Additional authors for this research include Travis Chow, Tzu-Ting Lin and Jeffrey Ng.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1111/jori.12367. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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