Project Update

Insurance—Disclosures about Short-Duration Contracts

Last updated on September 17, 2014. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations. Please refer to the main Insurance project page for additional information related to the project.

Project Objective
Due Process Documents
*Decisions Reached at Last Meeting
*Tentative Board Decisions Reached to Date
*Next Steps
*Board/Other Public Meeting Dates
Background Information
Contact Information

PROJECT OBJECTIVE 

The objective of the project is to develop targeted improvements to disclosures about short-duration insurance.

DUE PROCESS DOCUMENTS 

The FASB issued a proposed Accounting Standards Update, Insurance Contracts (Topic 834) on June 27, 2013. The comment period ended on October 25, 2013. 

Details of the Board’s deliberations with the IASB and feedback received on the 2013 proposed Update can be found on the page, Insurance Contracts—Joint Project of the FASB and IASB.

*DECISIONS REACHED AT LAST MEETING (August 13, 2014)

Incurred and Paid Claims Development Tables

The Board affirmed its previous decision that incurred and paid claims development tables should be disclosed in the financial statement footnotes and that those disclosures need not go back more than 10 years, but that they should present information for the number of years for which claims incurred typically remain outstanding.

Health Insurance Claims

The Board decided that insurance entities that issue short-duration insurance contracts should disclose in their interim and annual financial statements the incurred but not reported liabilities included in the liability for unpaid claims and claim adjustment expenses for health insurance claims, either as a separate disclosure or as a component of the rollforward of the liability for unpaid claims and claim adjustment expenses. The rollforward should be disaggregated so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have different characteristics.

Effective Date

The Board decided that for public business entities, the final guidance should be effective for annual reporting periods beginning after December 15, 2014, and interim reporting periods within annual reporting periods beginning after December 15, 2015. The Board decided on a one-year delay for all other entities. The Board also decided to allow early adoption for all entities.

*TENTATIVE BOARD DECISIONS REACHED TO DATE (AS OF August 13, 2014)

Tentative Board Decisions to Date

*NEXT STEPS

The Board directed the staff to draft an Accounting Standards Update for vote by written ballot with an extended time frame for external review by a broad range of stakeholders.

*BOARD/OTHER PUBLIC MEETING DATES

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

*August 13, 2014 Board Meeting—Short-Duration Contracts Disclosures
July 16, 2014 Board Meeting—Short-Duration Contracts Disclosures
June 4, 2014 Board Meeting—Short-Duration Contracts Disclosures
April 16, 2014 Board Meeting—Scope and project direction
February 19, 2014 Board Meeting—Scope and project direction

BACKGROUND INFORMATION

In August 2007, the Board issued an Invitation to Comment, An FASB Proposal: Accounting for Insurance Contracts by Insurers and Policyholders, which included the IASB’s May 2007 Discussion Paper, Preliminary Views on Insurance Contracts. The Boards’ objective in undertaking the proposed project was to develop a common, high-quality standard that addresses recognition, measurement, presentation, and disclosure requirements for insurance contracts. The Board received 45 comment letters in response to the Invitation to Comment, which led to its decision in October 2008 to participate in the project jointly with the IASB. The Boards held more than 50 meetings to discuss various proposals to develop a common standard for insurance contracts. While the Boards reached common decisions in many areas, they reached different conclusions in others. On June 27, 2013, the Board issued a proposed Accounting Standards Update, Insurance Contracts (Topic 834). Details of the Board’s deliberations with the IASB and feedback received on the 2013 proposed Update can be found on the page, Insurance Contracts—Joint Project of the FASB and IASB.

In light of the feedback received on the 2013 proposed Update, the Board decided to limit the scope to insurance entities as described in existing U.S. GAAP. The Board also decided that the project should focus on making targeted improvements to existing U.S. GAAP. For short-duration contracts, the Board decided to limit the targeted improvements to enhancing disclosures.

CONTACT INFORMATION

Meredith Brown
Practice Fellow
mabrown@fasb.org
Jeremie Richer
Assistant Project Manager
jricher@fasb.org
Jay Shah
Project Research Associate
jshah@fasb.org
Matt Silver
Postgraduate Technical Assistant
mrsilver@fasb.org
Kate Konetzke
Postgraduate Technical Assistant
klkonetzke@fasb.org