FASB Amendments – ASU 2020-11

The FASB issued Accounting Standard Update 2020-11, considering insurance entities. Due to the Coronavirus Pandemic, insurance entities were no longer able to perform the requirements of ASU no. 2018-12 Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI) effectively. ASU 2018-12 is focused on improvements to existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by insurance entities (FASB, 2018, ASU 2018-12). On November 15, 2019, the Board issued Accounting Standards Update No. 2019-09. This Update postponed the initial effective date of LDTI for all entities with early application. ASU 2020-11 was issued as an update to the changes and additions of ASU No. 2019-09. The FASB issued the Update to:

1. Provide additional time for implementation by deferring the effective date of LDTI by one year for all insurance entities.

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2. Provide transition relief to facilitate the early application of LDTI and encourage accelerated delivery of better information to investors and other financial statement users.

The change is noted as the first Update noted that for entities that meet the definitions of an SEC filer, not including smaller reporting companies (SRCs), LDTI guidance was effective beginning after December 15, 2021 (FASB, 2020, ASU 2020-11). The second Update pushed this date back to December 15, 2022. ASU 2019-09 also provided that the guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, for all other entities. The dates were also pushed back by a year due to the updates of ASU 2020-11 (FASB, 2020, ASU 2020-11).

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