What is Annual Convention Blank
The annual convention blank is an annual report that insurance carriers must file with the state insurance commissioner. This report will outline the carrier's current reserves, employees making over $40,000 a year, expenses and assets, among other things. The annual convention blank must be filed in order to show that a carrier is financially capable of doing business within the state.
BREAKING DOWN Annual Convention Blank
Annual convention blanks must be filed with the commissioner of each state in which a carrier transacts business. Basically, this form allows the state to determine whether or not the insurance company has adequate reserves to pay out benefit payments as they come due.
Many in the insurance industry regard the annual convention blank report as the single most important requirement in insurance regulation. The form of the annual statement is mostly standardized by agreement among state insurance regulators, under the auspices of the National Association of Insurance Commissioners (NAIC).
Every state's insurance law requires all licensed insurers to complete and file this report annually, usually due on the first day of March. The purpose of the annual statement is to provide full disclosure of the insurer's financial condition to regulators and the public, as well as all existing and potential policyholders, agents and brokers, ceding and assuming reinsurers and anyone else that may have interest.
The annual statements must be prepared according to statutory accounting principles. Most states require these annual reports to be certified as accurate by officers of the insurer, and many states also require that independent accountants provide a certification to the effect that the statement meets certain criteria of financial reporting.
Contents of Annual Convention Blank Reports
The annual convention blank reports typically include:
- A year-end balance sheet (or statement of assets, liabilities, surplus and other funds)
- Underwriting and investment exhibit, which includes a statement of income, a cash flow statement, summaries of interest, dividends and real estate income, capital gains and losses, premiums earned, losses paid and incurred, unpaid losses and adjustment expenses and a listing of general expenses
- An analysis of admitted and non-admitted assets
- General questions and answers from the insurer, concerning various kinds of investments and other transactions of the company
- Schedule of statutory deposits held by insurance regulatory authorities
- A five-year historical analysis of premiums, losses and expenses
- Schedules A through Y, which include information about assets and investments bought, sold and held at year-end, reinsurance transactions and losses and loss expenses over a 10-year period
- An organizational chart showing the relationships between the insurer and all its affiliates and subsidiaries