Insurance—Targeted Improvements to the Accounting for Long-Duration Contracts
Last updated on October 3, 2016. 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.
*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 improve, simplify, and enhance the financial reporting requirements for long-duration contracts issued by insurance entities, thus providing financial statement users with more decision-useful information about the amount, timing and uncertainty of cash flows related to long-duration contracts.
*DUE PROCESS DOCUMENTSThe FASB issued a proposed Accounting Standards Update, Financial Services–Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, on September 29, 2016. The due date for comment letters is December 15, 2016.
- Download the September 29, 2016 proposed Accounting Standards Update—Financial Services–Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.
- Read the FASB in Focus which summarizes the proposed Accounting Standards Update.
- Read the press release (Link to document) on the proposed Accounting Standards Update.
- Use the electronic feedback form to submit comments on the proposed Accounting Standards Update.
DECISIONS REACHED AT LAST MEETING (AUGUST 31, 2016)Analysis of Benefits, Costs, and Complexities
The Board concluded that it has received sufficient information and analysis on the proposed amendments to the guidance for long-duration contracts to make an informed decision on the issues presented and that the expected benefits of the proposed amendments justify the expected costs.
Permission to Ballot on a Proposed Update
The Board directed the staff to draft a proposed Accounting Standards Update for a vote by written ballot.
The Board decided to provide a 75-day comment period for the forthcoming proposed Update and hold a public roundtable after the end of the comment period.
TENTATIVE BOARD DECISIONS REACHED TO DATE (As of AUGUST 31, 2016)Tentative Board Decisions to Date
*NEXT STEPSThe due date for comment letters is December 15, 2016. The Board will consider feedback received on the proposed Accounting Standards Update at a future meeting. Please refer to the current technical plan for information about the project timeline.
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.
|August 31, 2016||Board Meeting—Permission to Ballot|
|March 23, 2016||Board Meeting—Transition Methods and Disclosures and Deferred Acquisition Costs|
|February 24, 2016||Board Meeting—Presentation and Disclosure|
|November 19, 2015||Board Meeting—Assumption Update Frequency and Accounting for Market Risk Benefits|
|October 28, 2015||Board Meeting—Accounting for Participating Life Insurance Contracts|
|September 16, 2015||Board Meeting—Accounting for Certain Benefit Guarantees in Nontraditional Contracts and Participating Life Insurance Contracts|
|July 24, 2015||Board Meeting—Assumption Update Methods|
|May 21, 2015||Educational Board Meeting—Methods for Calculating and Recording the Effect of Assumption Updates|
|February 18, 2015||Board Meeting—Amortization of Deferred Acquisition Costs|
|November 19, 2014||Board Meeting—Discount Rate|
|August 27, 2014||Board Meeting—Assumptions, Discount Rate, Premium Deficiency, and Loss Recognition|
|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 Agenda 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 generally accepted accounting principles (GAAP). The Board also decided that the project should focus on making targeted improvements to existing GAAP.
For short-duration contracts, the Board decided to limit the targeted improvements to enhancing disclosures. The FASB issued Accounting Standards Update No. 2015-09, Financial Services—Insurance (Topic 944): Disclosures about Short-Duration Contracts, on May 21, 2015.
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