Another extension for accounting deadlines could be in store, this time for the insurance industry.
The Financial Accounting Standards Board said Thursday that it would meet June 10 to consider whether to delay the date by which insurance companies—including Prudential Financial Group Inc., MetLife Inc., and Cigna Corp. and other businesses that write long-term policies like life and disability—have to comply with significant new insurance accounting rules.
The long-duration insurance accounting standard, published in 2018, requires insurers to overhaul how they tally the liabilities embedded in their promises to customers. Acknowledging that the revamped rules were taking insurers more time than they expected, FASB in November agreed to extend the compliance deadline for public companies to 2022. Privately held insurers and smaller publicly traded companies have until 2024.
- Given the economic chaos of the coronavirus pandemic, that extension still isn’t enough, the American Council of Life Insurers told FASB in March. Insurers facing “unprecedented challenges” need at least an additional year, the group wrote.
- The new insurance standard aims to shed light on the promises and projections insurers make. Under the existing accounting rules, when an insurer writes policies for its customers, it makes assumptions about their health and likelihood of missing payments but doesn’t revisit those assumptions unless the policies start losing money. For long-running policies like life insurance, those assumptions could be years or even decades out of date.
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