United States

Proposed delayed effective dates for long-duration insurance contracts

FINANCIAL REPORTING INSIGHTS  | 

The Financial Accounting Standards Board (FASB) recently issued a proposed Accounting Standards Update (ASU), Financial Services – Insurance (Topic 944): Effective Date. If finalized, the proposed ASU would provide additional time to apply the FASB’s accounting guidance for long-duration insurance contracts in ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.

As originally issued, ASU 2018-12 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

The amendments in the proposed ASU would defer the effective date of ASU 2018-12 for all entities as follows:

  • For SEC filers, excluding entities eligible to be smaller reporting companies (SRC) as defined by the SEC, ASU 2018-12 would be effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. (The determination of whether an entity is an SRC would be based on an entity’s most recent determination in accordance with SEC regulations as of the issuance of the final ASU related to the effective date.)
  • For all other entities, ASU 2018-12 would be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
  • Early application would continue to be permitted.

The proposed ASU is available for comment until September 20, 2019.