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Insurance — disclosures about short-duration contracts

The FASB’s objective in this project was to make targeted improvements to the disclosure requirements related to short-duration contracts; the Board did not change the accounting model for these contracts or the scope of the guidance (i.e., the guidance still applies only to insurance entities). A final Accounting Standards Update (ASU) was issued in May 2015.

Under the ASU, insurance entities with short-duration insurance contracts will disclose annually the following information:

  • Disaggregated incurred- and paid-loss development tables (showing amounts net of reinsurance) that disclose, at a minimum, activity from the earliest period for which uncertainty arose about the amount and timing of claims payments through the most recent year presented in the financial statements (although the periods included in the tables need not exceed 10 years). An insurer also must reconcile the disclosure about claims development to the liability for unpaid claims and claim adjustment expenses (CAEs) recognized in the statement of financial position and separately disclose ceded reinsurance at the same level of disaggregation used in the claims development tables.
  • Net outstanding claims for all years before those presented in the development tables, at the same level of disaggregation used in the development tables.
  • For each period presented in the claims development tables, disaggregated information about (1) claim frequency and (2) the amount of incurred-but-not-reported (IBNR) liabilities plus expected development on reported claims that are included in the claims development tables. Entities are also required to disclose their methods for determining these amounts.
  • The average annual percentage payout of claims by accident year as derived from the claims development tables.
  • For liabilities of unpaid claims and CAEs that are discounted, the effects of the discounting, including (1) the amount of the discount, (2) the amount of interest recognized during the period, and (3) the financial statement line item(s) in which the interest accretion is classified.
  • Information about any material changes in judgments used in the computation of the liability for unpaid claims and CAEs (e.g., a change in assumptions), including reasons for the change and the impact on the financial statements.

In addition, insurance entities will disclose the following in both interim and annual periods:

  • The rollforward of the liability for unpaid claims and CAEs.
  • Total IBNR liability included in the liability for unpaid claims and CAEs for health insurance claims, either as a separate disclosure or as a component of the rollforward of the liability, at an appropriate level of disaggregation.


Effective date

The ASU is effective for public entities for annual periods beginning after December 15, 2015, and interim periods within annual reporting periods beginning after December 15, 2016. All other entities have an additional year to adopt the new requirements. Early application is permitted.

Refer to Deloitte’s May 2015 Insurance Spotlight for additional information.


FASB project information

For further information, see the project update page on the FASB’s Web site.



Rick Sojkowski
Partner, Deloitte & Touche LLP
Mark Bolton
Director, Deloitte & Touche LLP
Joe DiLeo
Director, Deloitte & Touche LLP

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