• Deferred Acquisition Costs (DAC) is an accounting method used in the insurance industry.

  • Using the DAC method allows the company to defer the sales costs associated with attracting a new client for the duration of the insurance contract.
  • Using this accounting method tends to reduce the burden on policy in the first year and provide a smoother revenue structure.
  • Companies can only defer the costs associated with the successful placement of a new business and cannot amortize all back office costs.