• Register
Return to: Home > News > Standards > FASB issues insurance contract proposals

FASB issues insurance contract proposals

The Financial Accounting Standards Board (FASB) has issued for public comment a proposal to improve accounting for insurance contracts.
This follows the International Accounting Standards Board (IASB) issuing its report on the same issue last week.

"The proposed standard is intended to bring greater consistency and relevance to the accounting for contracts that transfer significant risk between parties," said FASB chairman Leslie Seidman.
The proposal aims to improve financial reporting of insurance contracts, including measurement of insurance liabilities and the related effect on the statement of comprehensive income.

The FASB said they worked with the IASB on the joint insurance contracts project to improve existing US GAAP, and also work towards a "converged international standard".
However, the FASB said both proposals contain similar fundamentals, "most notably the use of current estimates? but differences exist".

One of the most significant changes in the FASB proposal is that the proposed update would require contracts that transfer significant insurance risk to be accounted for in a similar manner, regardless of the type of institution issuing the contract.
"In other words, the contractual features of the contract?not the type of insurer?would determine whether it is insurance.
Consequently, the proposed standard would apply to banks, guarantors, service providers and other types of insurers, in addition to insurance companies," the FASB explained.

Commenting on the proposal PwC US national professional services financial instruments co-leader Donald Doran said he expects the industry to have missed reviews on the proposal.
"Based on the number and nature of differences between the views expressed by the FASB and IASB during their deliberations, and the immediate need for an international standard, the boards may not achieve a converged standard."

Doran also raised concerns of increased income statement volatility as a result of the requirement to update assumptions each period.

Stakeholders are asked to review and provide comment on the proposal by 25 October.

Related articles:


Top Content

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more

    FASB: a quest for simpler standards

    FASB chair Russell Golden addressed the IMA 2019 Annual Conference and Expo at the Sheraton San Diego Hotel and Marina, California, on 18 June. IMA immediate former chair-emeritus Alex Eng acted as moderator. Joe Pickard reports.

    read more

    The future of audit, and how to get there

    Two recent reports peer into the future of the audit profession. One analyses what an audit should offer, while the other looks at how the audit process will be carried out. Robin Amlôt takes a closer look at both.

    read more

    EFAA elects new president, focuses on digital future

    EFAA’s new president, Salvador Marin, outlined his key priorities for the next two years at the organisation’s 2019 annual general meeting, while outgoing president Bodo Richardt offered advice. Robin Amlôt reports.

    read more


    As the Coronavirus (COVID-19) continues to spread across the world, the International Accounting Bulletin and The Accountant will be collating all the latest news and updates from the profession on the pandemic’s impact.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.