FASB Delays Implementation of Insurance Contracts Standard
FASB published an update to delay the long-duration insurance guidance by an additional year and to ease early adoption provisions to support companies adversely affected by COVID-19 pandemic. To this end, FASB issued the Accounting Standards Update No. 2020-11 to implement the earlier Accounting Standards Update No. 2018-12 on targeted improvements to the accounting for long-duration contracts or LDTI (Topic 944). However, for insurers that do not need the extra time, the Accounting Standards Update makes it easier and more cost-effective to maintain their current timelines and adopt the LDTI early.
For insurance companies that need extra time, the Accounting Standards Update permits them to delay implementation by one year as follows:
- For SEC filers, excluding smaller reporting companies as defined by the SEC, LDTI will be effective for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years.
- For all other entities, LDTI will be effective for fiscal years beginning after December 15, 2024 and for interim periods within fiscal years beginning after December 15, 2025.
To facilitate early application of LDTI, an entity that chooses early application may do so as of the beginning of the prior period presented or as of the beginning of the earliest period presented. For example, a large calendar-year public insurance entity could reflect LDTI as of January 01, 2021 (and record a transition adjustment as of that date) in its 2022 financial statements if the entity elects early application, or in its 2023 financial statements if the entity does not elect early application.
Related Links
Keywords: Americas, US, Accounting, Insurance, COVID-19, Insurance Contracts, Topic 944, LDTI, IFRS 17, Implementation Timeline, FASB
Featured Experts
Gavin Conn
Experienced life actuary; background in economic capital modeling; ALM specialist; IFRS 17 researcher
David Fihrer
Skilled life insurance actuary; subject matter expert on IFRS 17 and source of earnings
Cassandra Hannibal
Life insurance actuary; risk management and economic capital specialist
Previous Article
ESMA Consults on Disclosure Obligations Under Taxonomy RegulationRelated Articles
EBA Updates Filing Rules for Supervisory Reporting
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
EBA Publishes Standards on Disclosure of Investment Policy Under IFR
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
APRA Finalizes Guidance for New Prudential Standard on Remuneration
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
OCC Updated LIBOR Self-Assessment Tool for Banks
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
TCFD Updates Guidance for Financial Disclosures on Climate Risk
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
BCBS Report Examines Progress on Adoption of Basel III Framework
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
ACPR Implements Updates Related to DPM Version 3.1
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
EBA Note Examines Transition Risks of Benchmark Rates
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
