Insurance—Disclosures about Short-Duration Contracts
Last updated on March 18, 2015. 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.
Due Process Documents
*Decisions Reached at Last Meeting
*Tentative Board Decisions Reached to Date
*Board/Other Public Meeting Dates
PROJECT OBJECTIVEThe objective of the project is to develop targeted improvements to disclosures about short-duration insurance.
DUE PROCESS DOCUMENTSThe 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 (March 11, 2015)
Claims Development Table
The Board decided that all years in the claims development table that precede the current reporting period and the related disclosure about the history of claims duration should be presented as required supplementary information.
Frequency of Claims
The Board decided to include a disclosure objective of providing information about claim frequency along with a description of methodologies for determining claim frequency information, unless it is impracticable to do so.
Incurred-But-Not-Reported (IBNR) Liabilities
The Board decided that for each accident year presented in the claims development table, entities should disclose the amount of IBNR liabilities plus expected development on reported claims and provide an explanation of the methodologies used for determining the amounts disclosed.
Effective Date and Transition
The Board decided that for public business entities, the final guidance should be effective for annual reporting periods beginning after December 15, 2015, and for interim reporting periods within annual reporting periods beginning after December 15, 2016. The Board decided on a one-year delay for all other entities, with early adoption permitted for all entities.
*TENTATIVE BOARD DECISIONS REACHED TO DATE (AS OF March 11, 2015)Tentative Board Decisions to Date
*NEXT STEPSThe Board affirmed that the expected benefits justify the perceived costs of the guidance included in the draft Update and directed the staff to proceed to a final Accounting Standards Update for vote by written ballot.
*BOARD/OTHER PUBLIC MEETING DATESThe 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.
|*March 11, 2015||Board Meeting—Short-Duration Contracts Disclosures|
|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 INFORMATIONIn 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.
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