FASB issued a proposed Accounting Standards Update that would grant all insurance companies that issue long-duration contracts, such as life insurance and annuities, additional time to apply the standard that addresses this area of financial reporting. Stakeholders are encouraged to review and provide comment on the proposal by September 20, 2019. As per the proposal, January 2022 (instead of January 2021) will be the new effective date for SEC filers other than smaller reporting companies while January 2024 (instead of January 2022) will be the new effective date for smaller reporting companies, other public business entities, and all the other entities (assuming the calendar-year-end reporting).
FASB, on August 15, 2018, had issued the Accounting Standards Update No. 2018-12 on targeted improvements to the accounting for long-duration contracts (Topic 944). The update made targeted amendments to improve, simplify, and enhance the financial reporting requirements for long-duration contracts issued by insurance companies. Since then, FASB has received a request to delay its effective date by one year. In response, FASB members and staff conducted outreach with numerous insurance companies that issue and/or reinsure long-duration contracts to better understand their implementation challenges and progress.
Furthermore, on August 15, 2019, FASB issued a proposed update that describes the new FASB philosophy for determining how effective dates for major standards are staggered between larger public companies and all other entities. Under this philosophy, a major standard would first be effective for larger public companies; effective dates for all other public and private companies and organizations would be staggered at least two years later. Therefore, based on the observations while monitoring implementation of the long-duration insurance standard and consistent with the new philosophy to stagger effective dates between large publicly traded companies and all other companies and organizations, FASB has proposed to grant all insurance companies at least one additional year to apply the standard. Generally, it is expected that early application would continue to be permitted for all entities.
- Press Release
- Proposed Update (PDF)
- Accounting Standards Update No. 2018-12 (PDF)
- New FASB philosophy
Comment Due Date: September 20, 2019
Effective Date: January 2022/January 2024
Keywords: Americas, US, Accounting, Insurance, Insurance Contracts, Topic 944, IFRS 17, Implementation Timeline, FASB
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