FASB Proposes to Delay Implementation of Insurance Contracts Standard
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944). However, for insurers that may not need the extra time, the proposal would make it easier and cost-effective to maintain their current timelines and adopt LDTI early. Comment on the proposal are invited by August 24, 2020.
The proposed Accounting Standards Update would permit insurance companies to delay implementation by one year as follows:
- For SEC filers, excluding smaller reporting companies as defined by the SEC, LDTI would be effective for fiscal years beginning after December 15, 2022 and for interim periods within those fiscal years.
- For all other entities, LDTI would 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, the early application transition date would be the beginning of the prior period presented (rather than beginning of the earliest period presented), thus aligning the early application transition date with the standard transition date for SEC filers. For example, a large calendar-year public insurance entity would 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.
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Comment Due Date: August 24, 2020
Keywords: Americas, US, Accounting, Insurance, COVID-19, Insurance Contracts, Topic 944, LDTI, IFRS 17, Implementation Timeline, FASB
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