Industry Insights

Long-Duration Insurance Proposal

October 2016

Executive Summary

On September 29, 2016, the Financial Accounting Standards Board issued a proposed Accounting Standards Update making targeted changes to accounting for long-duration insurance contracts, such as life insurance, disability income, long-term care and annuities. The proposed changes include:

  • Liability for future policy benefits assumptions would be unlocked
  • Annual update of cash flow assumptions
  • Quarterly update of discount rate assumptions
  • Discount rate would be at a high-quality, fixed-income instrument yield
  • All market risk benefits would be measured at fair value
  • Deferred acquisition cost would be amortized in proportion to the amount of insurance in force or on a straight-line basis
  • New disclosures

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