Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 98

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1
Chunk 98
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, to a lesser extent, assumptions as to our internal operations. Assumptions related
to our external environment include the potential impact of significant changes in tort law and the legal environment which may impact
liability exposure, the trends in judicial interpretations of insurance coverage and policy provisions, and the rate of loss cost inflation.
Internal assumptions include consistency in the recording of premium and loss data, consistency in the recording of claims, payment and
case reserving methodologies, accurate measurement of the impact of rate changes and changes in policy provisions, consistency in the
quality and characteristics of business written within a given line of business, and consistency in reinsurance coverage and collectability
of reinsured losses, among other items. To the extent we determine that underlying factors impacting our assumptions have changed, we
attempt to make appropriate adjustments for such changes in our reserves. Accordingly, our ultimate liability for unpaid losses and loss
adjustment expenses will likely differ from the amount recorded.

Income Taxes

Insurance companies typically pay state premium taxes rather than
state income taxes. However, Direct Auto is subject to state income taxes in the state of Illinois, in addition to state premium taxes.
Additionally, NI Holdings, on a stand-alone basis, pays state income taxes to the state of North Dakota for income or losses generated
as a separate financial entity. State premium taxes are included as a part of amortization of deferred policy acquisition costs. State
income taxes are reported along with federal income taxes as income tax expense (benefit).

The Company did not have any material uncertain tax positions as
of December 31, 2024 and 2023. The Company’s policy is to recognize tax-related interest and penalties accrued related to unrecognized
benefits as a component of income tax expense. The Company did not recognize any tax-related interest and penalties, nor did it have any
tax-related interest or penalties accrued as of December 31, 2024 and 2023.

We account for deferred income taxes using the asset and liability
method. The objective of the asset and liability method is to establish deferred income tax assets and liabilities for the temporary differences
between the financial reporting basis and the income 

59 

tax basis of our assets and liabilities at enacted tax rates expected to be in effect
when we realize or settle such amounts.

We re-measure existing deferred income tax assets (including loss
carryforwards) and liabilities when a change in tax rate occurs and record an offset for the net amount of the change as a component of
income tax expense from continuing operations