Term Of The Day – Acquisition Costs
Workers Comp policy acquisition costs (in most states) are broken down into four areas:
- Agent Commissions
- Premium tax
- Second Injury fund tax
- Other costs
They are considered as pro-rata on the current and future company balance sheets centered around the anticipated investment income. This is the same as a person or business writing off their expenses on their taxes that resulted in associated income.
If the costs cannot be recovered, they are written off as noncollectable if there is not enough income to cover the expenses.
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