FASB issued a proposal Thursday that would delay the effective date of the board's new standard on long-duration insurance contracts by one year in an effort to provide relief to insurance companies affected by the coronavirus pandemic.
The proposal also would make early adoption easier and more cost-effective for insurers that may not need the extra time.
Under the proposal, the effective date for SEC filers, excluding smaller reporting companies as defined by the SEC, would be for fiscal years beginning after Dec. 15, 2022, and interim periods within those fiscal years.
For all other entities, the new standard would take effect for fiscal years beginning after Dec. 15, 2024, and interim periods within fiscal years beginning after Dec. 15, 2025.
To facilitate early adoption, the proposal would allow insurance companies to restate only one previous period, rather than two, if they choose to early adopt the standard.
"Some insurance companies expressed concerns about their ability to perform a quality implementation … while managing the effects of the COVID-19 pandemic," FASB Vice Chairman James Kroeker said in a news release. "The proposed ASU would provide these companies an additional year, while also reducing complexity for companies that remain on track to make a successful transition to the standard by their current effective date."
Comments on the proposal are due Aug. 24 and can be submitted at FASB's website.
—Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA's editorial director.