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Insurance contracts — overview

In June 2013, the FASB released a proposed Accounting Standards Update (ASU) for public comment as part of its joint project with the IASB on insurance contracts. (The IASB issued an exposure draft, its second on this topic, the same month — see discussion below.) Although the boards had made progress in bridging their differing views during the previous two years of deliberations, they were unable to fully converge their proposals.

In response to constituent feedback, the FASB tentatively decided in February 2014 to narrow the scope of its insurance contracts project by (1) limiting the scope of insurance accounting to insurance entities and (2) shifting the focus of its future efforts to making targeted improvements to the existing U.S. GAAP insurance accounting and disclosure models. For short-duration contracts, the FASB decided that its targeted improvements should focus only on disclosure requirements; for long-duration contracts, the targeted improvements would take into account the requirements for recognition, measurement, and disclosure. The Board also decided to deliberate the targeted improvements to short- and long-duration contracts as separate projects. In July 2014, it also tentatively decided that reinsurance accounting would be outside the scope of its redeliberations.

In May 2015, the FASB issued a final ASU on disclosure requirements for short-duration insurance contracts. The Board is continuing to redeliberate targeted improvements for long-duration insurance contracts.

For more information, see our project pages on:

IASB’s insurance contracts project

The IASB is currently redeliberating its 2013 exposure draft. According to the IASB staff’s March 2015 project update, the IASB expects to issue a final insurance standard after 2015. Moreover, the mandatory effective date of the standard will be after the effective date of IFRS 9, which is January 1, 2018. On the basis of the IASB’s tentative decisions, the final standard is likely to establish an accounting model and disclosure requirements that significantly differ from those under U.S. GAAP. For more information, see the IASB insurance contracts project page on Deloitte’s IAS Plus Web site.

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