Insurance companies get new disclosure requirements

Rules provide more information about liabilities in short-duration contracts.

FASB issued new disclosure requirements for insurance companies, which are designed to provide more information about liabilities related to short-duration contracts, which typically last one year or less.

Accounting Standards Update (ASU) No. 2015-09, Financial Services—Insurance (Topic 944): Disclosures About Short-Duration Contracts, requires insurance companies to provide additional information for financial statement users.

The ASU's five main provisions require an insurance company to:

  • Provide tables on a disaggregated basis illustrating the amount of insurance claims that have been incurred, as well as the amounts the insurance company has paid out on these claims.
  • Reconcile the claims development tables to the amount of the liability presented on the balance sheet.
  • Disclose, for each accident year presented in the claims development tables, the total of incurred claims that have yet to be reported, plus the company's estimate of whether reported claim amounts will increase.
  • Provide disaggregated information about the frequency of reported claims, unless obtaining this information is impracticable.
  • Provide a disaggregated history of claims duration, presented as the average annual percentage payout of incurred claims by age.

SPONSORED REPORT

Keeping client information safe in an age of scams and security threats

A look at the Dirty Dozen tax scams and ways to protect taxpayer information.

TAX PRACTICE CORNER

More R&D tax help

"Can I use the R&D credit?" PATH Act enhancements make the credit more attractive to a wider range of taxpayers.

QUIZ

Learn to choose between ‘who’ and ‘whom’

Writers can stumble over who and whom (or whoever and whomever). If you write for business, this quiz can help make your copy above reproach.