OverviewThe FASB undertook the insurance project with the objective of making targeted improvements to the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance company.
During the FASB’s outreach, stakeholders—including investors and other financial statement users—indicated that the insurance accounting model did not provide sufficient decision-useful information in a timely or a transparent manner.
To address these issues, the amendments in FASB Accounting Standards Update No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts:
- Improve the timeliness of recognizing changes in the liability for future policy benefits and modify the rate used to discount future cash flows
- Simplify and improve the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts
- Simplify the amortization of deferred acquisition costs
- Improve the effectiveness of the required disclosures.