The Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2015-09 as a result of feedback that the current recognition and measurement model was adequate, but additional disclosures would increase the transparency of this significant estimate.
These additional disclosures focus on the estimates of unpaid claims and claims adjustment expenses as well as provide additional information regarding the amount, timing and uncertainty of cash flows arising from these insurance contracts.
All insurers issuing short-duration contracts will be impacted by the new accounting update. Additional disclosures and changes to existing disclosures will be needed. Learn more about the specific types of contracts that are considered “short-duration” and the insurance company types that will be most impacted in the full article.
Insurance entities are required to disclose the basis for estimating unpaid claims and claim adjustment expense liability. As significant judgment is applied in selecting the actuarial methods and assumptions used in this estimate, FASB decided a disclosure concerning significant changes to these methodologies and assumptions should also be required. Learn more about the changes from the accounting standards update in the full article.
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