In 2014, the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) boards decided to agree to disagree and the ultimate concept of convergence has ended. Therefore, where are we today after ten years of convergence work? Some convergence projects have been completed successfully as envisioned-aligned principles even if the words differed. Others have been completed with partial success-some progress toward converged standards, but some differences remain. And some convergence projects either were discontinued or resulted in different IASB and FASB standards because, in the end, the two boards just could not agree.
Impact to Insurance Industry
On February 19, 2014, the FASB decided to scale back the scope of its project on insurance contracts. For insurers, the FASB voted to narrow the scope to identifying targeted improvements to U.S. GAAP. These decisions signaled the end of joint efforts with the IASB to issue a new, mostly converged standard on accounting for insurance contracts.
For insurance entities, the FASB has focused on identifying targeted improvements to existing U.S. GAAP accounting for long-duration insurance contracts, which principally covers life and annuity business. The board has also issued disclosure-only enhancements for short-duration insurance contracts.
For short-duration contracts (principally property/casualty and health insurance contracts), the FASB is limiting its proposals to enhancing disclosures. The disclosures proposed by FASB include annual disaggregated incurred and paid claims development tables that need not exceed ten years, the incurred but not reported claim liabilities included within the incurred claim development table, claim count and interim as well as year-end roll forwards of claim liabilities.
FASB deliberations on short-duration insurance contract disclosures were substantially completed in August 2014. The FASB is not planning on re-exposing these proposed disclosures for formal public comment. The FASB disclosures are expected to be effective for year-end 2015 financial statements and for interim financial reporting beginning in 2016.
Our Property & Casualty (P&C) Insurance Group is available if you have any questions or concerns about this industry update. As an A.M. Best Ranked practice, the BSSF P&C Insurance Group is one of the largest in the Mid-Atlantic region to service the industry.
ABOUT THE AUTHOR
Hank J. Straub, CPA
Hank is a Principal and Treasurer with Brown Schultz Sheridan & Fritz specializing in accounting and audits of property and casualty insurance companies. His expertise in the insurance practice extends beyond the Central PA region of Harrisburg, Lancaster, and York. Hank and his team serve clients in the Mid-Atlantic Region, with a focus in Pennsylvania, New Jersey, Maryland, Delaware, Virginia, and New York.