FASB Expands Discussion on Insurance Contracts


FASB issued a Discussion Paper on Friday to solicit broad-based input on how to improve, simplify and converge the financial reporting requirements for insurance contracts. The Discussion Paper, Preliminary Views of Insurance Contracts, is part of FASB’s joint project with the International Accounting Standards Board (IASB), which issued an exposure draft this summer of a proposed IFRS that would apply to all insurance contracts written by both insurance companies and noninsurance companies.

FASB said it chose to issue the Discussion Paper instead of an ED because it would first like to receive stakeholder input on the following issues:

  • The extent of FASB’s and the IASB’s current accounting guidance for insurance contracts varies significantly. Existing U.S. GAAP comprehensively addresses accounting for insurance contracts by insurance entities, whereas IFRSs do not have comprehensive guidance;
  • The board has not determined whether one model or two models would result in more useful information about insurance contracts. Current U.S. GAAP has separate models for long- and short-duration contracts with derivations within the long-duration model based on policy type; and
  • The board is considering whether employer-provided health insurance should be included within the scope of the insurance contracts project and how recent U.S. health care reform may affect the application of the approaches described in this Discussion Paper and in the IASB’s ED.

The Discussion Paper also asks stakeholders to provide input about the following:

  • Whether the IASB’s proposal would be a sufficient improvement to U.S. GAAP to justify the cost of change;
  • Whether the project goals of improvement, convergence and simplification would be more effectively achieved by making targeted improvements to existing U.S. GAAP (rather than issuing comprehensive new guidance); and
  • Certain critical accounting issues for which FASB’s preliminary views differ from the IASB’s ED. 

“The FASB believes it is important to gather as much information as possible at this stage of the project to help it decide the best way to improve the financial reporting for insurance contracts,” said FASB board member Marc Siegel in a press release. “This information will be helpful to both the FASB and the IASB in our deliberations.”

Comments on the Discussion Paper are due Dec. 15. FASB and the IASB plan to host a series of public round-table meetings in December to hear stakeholders’ views. Anyone who wants to participate in the round-table meeting in Norwalk, Conn., must notify FASB by Nov. 15, by sending an e-mail to director@fasb.org and must submit comments on the Discussion Paper and/or the IASB’s ED in writing by Nov. 30.

More from the JofA:

 Find us on Facebook      Follow us on Twitter

 

SPONSORED REPORT

How to make the most of a negotiation

Negotiators are made, not born. In this sponsored report, we cover strategies and tactics to help you head into 2017 ready to take on business deals, salary discussions and more.

VIDEO

Will the Affordable Care Act be repealed?

The results of the 2016 presidential election are likely to have a big impact on federal tax policy in the coming years. Eddie Adkins, CPA, a partner in the Washington National Tax Office at Grant Thornton, discusses what parts of the ACA might survive the repeal of most of the law.

COLUMN

Deflecting clients’ requests for defense and indemnity

Client requests for defense and indemnity by the CPA firm are on the rise. Requests for such clauses are unnecessary and unfair, and, in some cases, are unenforceable.