Rev. Proc. 2025-15

This revenue procedure provides discount factors for the 2024 accident year for use by insurance companies in computing discounted unpaid losses under § 846 of the Internal Revenue Code¹ and discounted estimated salvage recoverable under § 832. This revenue procedure also provides, for convenience, discount factors for losses incurred in the 2023 accident year and earlier accident years for use in taxable years beginning in 2024. The discount factors for accident years before 2024 were provided in earlier revenue procedures. See, e.g., Rev. Proc. 2023-41, 2023-52 I.R.B. 1609. See Rev. Proc. 2023-10, 2023-3 I.R.B. 411, for background concerning the loss payment patterns and application of the discount factors. This revenue procedure also requests comments relating to the composite method described in this revenue procedure and a 2024 change by the National Association of Insurance Commissioners (NAIC) to Schedule P (Analysis of Losses and Loss Expenses) of the annual statement.

This revenue procedure applies to any insurance company that is required to discount unpaid losses under § 846 for a line of business using the discount factors published by the Secretary of the Treasury or the Secretary’s delegate (Secretary) and also applies to any insurance company that is required to discount estimated salvage recoverable under § 832.

.01 The tables in this section 3 present separately for each line of business the discount factors for losses incurred in the 2024 accident year for use by insurance companies in computing discounted unpaid losses under § 846 and estimated salvage recoverable under § 832. The discount factors presented in this section are generally determined by using the applicable interest rate for 2024 under § 846(c), which is 3.18 percent, compounded semiannually. The exceptions are the discount factors for long-tail lines of business determined using the composite method described in section V of Notice 88-100, 1988-2 C.B. 439. See section 3.02 of this revenue procedure. All discount factors are determined by assuming all loss payments occur in the middle of the calendar year.

.02 Section V of Notice 88-100 sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. Tables 1 and 2 separately provide discount factors for insurance companies that have elected to use the composite method of Notice 88-100. See Rev. Proc. 2002-74, 2002-2 C.B. 980. The discount factors computed using the composite method are unrelated to the composite discount factors referred to in § 1.846-1(b)(1)(ii) and (4), which apply to lines of business for which the Secretary has not published discount factors. The composite discount factors for use with respect to such lines of business are labelled “Short-Tail Composite” (in Table 1, part B) and “Long-Tail Composite” (in Table 2, part B). The “Miscellaneous Casualty” discount factors referenced in § 1.846-1(b)(2) are not set forth in tables but are equivalent to the “Short-Tail Composite” discount factors.

.01 The tables in this section 4 present separately for each line of business discount factors for losses incurred in the 2024 accident year and earlier accident years for use by insurance companies in computing discounted unpaid losses under § 846 and estimated salvage recoverable under § 832 in taxable years beginning in 2024.

.02 Tables 3 and 4 separately provide discount factors for insurance companies that have elected to use the composite method of Notice 88-100. See Rev. Proc. 2002-74. The discount factors computed using the composite method are unrelated to the composite discount factors referred to in § 1.846-1(b)(1)(ii) and (4), which apply to lines of business for which the Secretary has not published discount factors. The composite discount factors for use with respect to such lines of business are labelled “Short-Tail Composite” (in Table 3, part B) and “Long-Tail Composite” (in Table 4, part B). The “Miscellaneous Casualty” discount factors referenced in § 1.846-1(b)(2) are not set forth in tables but are equivalent to the “Short-Tail Composite” discount factors.

The NAIC added Pet Insurance as a new separate line of business to be reported in Schedule P of the annual statement for 2024. Pet Insurance was previously reported as an Inland Marine line of business, which is reported in Schedule P as part of the Special Property line of business. Under § 1.846-1(b)(1)(iii), which deals with annual statement changes in the groupings of individual lines of business, unpaid losses for Pet Insurance are to be discounted using discount factors published for the Special Property line of business. See Table 1 (Part B) in section 3 of this revenue procedure and Table 3 (Part B) in section 4 of this revenue procedure.

.01 Comments Regarding Composite Method. Section V of Notice 88-100 sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. Beginning in 2024, the NAIC has changed Schedule P of the annual statement to require ten years of data (and a “prior” row) to be reported for all lines of business. The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) expect that composite method discount factors will be of limited use to insurance companies with respect to the lines of business set forth in Tables 1 and 3 following the NAIC change. The Treasury Department and the IRS request comments on:

(1) whether, and the extent to which, insurance companies expect to use composite method discount factors with respect to the lines of business set forth in Tables 1 and 3 following the NAIC change;

(2) whether insurance companies need the Secretary to continue publishing such composite method discount factors; and

(3) whether insurance companies require additional guidance regarding the use of composite method discount factors with respect to these lines of business.

.02 Procedures for Submitting Comments.

(1) Deadline. Written comments should be submitted by May 16, 2025.

(2) Form and manner. The subject line for the comments should include a reference to Revenue Procedure 2025-15. All commenters are strongly encouraged to submit comments electronically. However, comments may be submitted in one of two ways:

(a) Electronically via the Federal eRulemaking Portal at www.regulations.gov (type IRS-2025-0018 in the search field on the regulations.gov homepage to find this revenue procedure and submit comments); or

(b) By mail to: Internal Revenue Service, CC:PA:01:PR (Revenue Procedure 2025-15), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, D.C., 20044.

(3) Publication of comments. The Treasury Department and the IRS will publish for public availability any comment submitted electronically or on paper to its public docket on regulations.gov.

The principal author of this revenue procedure is James Carpino of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure, contact Mr. Carpino at (202) 317-6905 (not a toll-free call).

¹ Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code or the Income Tax Regulations (26 CFR part 1).