Life Insurers May Get Accounting Rule Compliance Extension
June 17, 2020 by Allison Bell
The Financial Accounting Standards Board (FASB) plans to give life insurers an extra year to implement an accounting standard that could lead to big swings in their quarterly and annual net results.
The Norwalk, Connecticut-based accounting standards group said Wednesday that its members have voted to issue a proposed accounting standards update related to the new standard. The proposed update would delay the implementation deadlines for the life insurance standards update, ASU 2018-12 Financial Services — Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.
ASU 2018-12 would require insurers with contracts that last for many years, such as annuities, life insurance policies, disability insurance policies, and long-term care insurance policies, to recalculate the projected size of the contract liabilities every time they report earnings, and to include the changes in their net income or net loss figures.