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to, Federal Government property are unallowable except to the extent that the awarding agency <br />has specifically required or approved such costs. <br />c. Actual losses which could have been covered by permissible insurance (through a <br />self-insurance program or otherwise) are unallowable, unless expressly provided for in the <br />Federal award or as described below. However, the Federal Government will participate in <br />actual losses of a self insurance fund that are in excess of reserves. Costs incurred because of <br />losses not covered under nominal deductible insurance coverage provided in keeping with sound <br />management practice, and minor losses not covered by insurance, such as spoilage, breakage, <br />and disappearance of small hand tools, which occur in the ordinary course of operations, are <br />allowable. <br />d. Contributions to a reserve for certain self-insurance programs including workers <br />compensation, unemployment compensation, and severance pay are allowable subject to the <br />following provisions: <br />(1) The type of coverage and the extent of coverage and the rates and premiums would have been <br />allowed had insurance (including reinsurance) been purchased to cover the risks. However, <br />provision for known or reasonably estimated self-insured liabilities, which do not become <br />payable for more than one year after the provision is made, shall not exceed the discounted <br />present value of the liability. The rate used for discounting the liability must be determined by <br />giving consideration to such factors as the governmental unit's settlement rate for those liabilities <br />and its investment rate of return. <br />(2) Earnings or investment income on reserves must be credited to those reserves. <br />(3) Contributions to reserves must be based on sound actuarial principles using historical <br />experience and reasonable assumptions. Reserve levels must be analyzed and updated at least <br />biennially for each major risk being insured and take into account any reinsurance, coinsurance, <br />etc. Reserve levels related to employee-related coverages will normally be limited to the value of <br />claims (a) submitted and adjudicated but not paid, (b) submitted but not adjudicated, and (c) <br />incurred but not submitted. Reserve levels in excess of the amounts based on the above must be <br />identified and justified in the cost allocation plan or indirect cost rate proposal. <br />(4) Accounting records, actuarial studies, and cost allocations (or billings) must recognize any <br />significant differences due to types of insured risk and losses generated by the various insured <br />activities or agencies of the governmental unit. If individual departments or agencies of the <br />governmental unit experience significantly different levels of claims for a particular risk, those <br />differences are to be recognized by the use of separate allocations or other techniques resulting <br />in an equitable allocation. <br />(5) Whenever funds are transferred from a self-insurance reserve to other accounts (e.g., general <br />fund), refunds shall be made to the Federal Government for its share of funds transferred, <br />including earned or imputed interest from the date of transfer. <br />e. Actual claims paid to or on behalf of employees or former employees for workers' <br />30 <br /> <br />