The FASB board has proposed to extend the effective dates of Accounting Standards Update No. 2018-12, Financial Services-Insurance (Topic 944) – Targeted Improvements to the Accounting for Long-Duration Contracts Issued by Insurance Companies. The promulgation directly impacts those insurance companies that issue long-term life insurance, disability income, long-term care, and annuity contracts. The Board contacted various insurance companies in the process of implementation and received overwhelming suggestion to extend the enactment dates in order to achieve a higher quality product.
The proposed Update would extend the effective date of the amendments in Update 2018-12 for all entities. For SEC filers, excluding entities eligible to be smaller reporting companies (SRCs), the modifications in Update 2018-12 would be effective for fiscal years beginning after December 15, 2021, and interim periods falling in those fiscal years. The definition of whether an entity is an SRC would be based on an entity’s most recent determination in accordance with SEC protocols as of the issuance of modifications in a final Update on the effective date for Topic 944. For all other companies, the modifications in Update 2018-12 would be effective for fiscal years beginning after December 15, 2023, and interim periods falling in those fiscal years beginning after December 15, 2024. Early application of the revisions in Update 2018-12 would be permitted.
FASB is seeking comments on the proposal by September 20, 2019.
Chart source: FASB