Statutory Accounting Principles Definition
Statutory Accounting Principles (SAP) are rules for insurance accounting codified by the National Association of Insurance Commissioners (NAIC) for the preparation of an insuring firm's financial statements. These rules focus on the balance sheet and solvency analysis, and differ from the Generally Accepted Accounting Principles (GAAP) used for other types of businesses. SAP are regarded as more regulatory and conservative than the GAAP . For example, SAP require that loss reserves be set by conservative formulas instead of the insurer's estimates.