FASB Issues Accounting Standards Update to Improve Disclosures for Short-Duration Insurance

By a News Reporter-Staff News Editor at Insurance Weekly News -- The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) intended to make targeted improvements to disclosure requirements for insurance companies that issue short-duration contracts-in which insurance coverage is provided for a fixed period of short duration (typically one year or less). Examples of short-duration insurance contracts subject to the enhanced disclosure requirements include auto, homeowners, renters, and catastrophe insurance. FASB ASU No. 2015-09, Financial Services-Insurance (Topic 944): Disclosures about Short-Duration Contracts, focuses on providing additional information about insurance liabilities to help users understand the nature, amount, timing, and uncertainty of future cash flows related to insurance liabilities; and the effect of those cash flows on the statement of comprehensive income.

"Stakeholders said that additional disclosures about unpaid claims and claim adjustment expenses for short-duration insurance contracts would provide transparency and additional insight into an insurance company's ability to underwrite," said FASB Chairman Russell G. Golden. "The disclosures required by this ASU are intended to provide investors a clearer picture of an insurance company's claim-related liabilities on the balance sheet, and how those liabilities change over time."

Keywords for this news article include: Finance and Investment, Financial Service Companies, Financial Accounting Standards Board.

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