The FASB has proposed an effective date delay, which would grant all insurance companies that issue long-duration contracts such as life insurance and annuities additional time to apply ASU No. 2018-12, Financial Services- Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.

The FASB received an agenda request to delay the effective date. In response, the FASB members and staff conducted research to determine the significance of implementation challenges. Based on the observations, the FASB proposed to grant all insurance companies a one-year deferral on implementation of ASU No. 2018-12.

In addition, the FASB has proposed a broad new philosophy for determining the effective dates for implementation for certain entities, which would result in effective dates for large public companies to be at least two years earlier than the effective date for other public and private companies and organizations. Consistent with this philosophy, the effective date for the above mentioned insurance standard would be two years after the effective date for SEC Filers other than smaller reporting companies.

If the proposal is approved, SEC filers excluding entities eligible to be small reporting companies would have a required implementation date for ASU No. 2018-12 for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years. For all other entities, ASU No. 2018-12 would be effective for fiscal years beginning after December 15, 2023 and interim periods beginning within the fiscal years beginning after December 15, 2024. Early application would be permitted.

The full text of the Exposure Draft is available here.

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