Making the most of additional time
Insurers may receive extra time to implement a significant accounting change, thanks to a vote by the Financial Accounting Standards Board (FASB) on July 17, 2019 to propose deferring the effective date of the Targeted Improvements to the Accounting for Long-Duration Contracts standard (LDTI). If adopted, the deferral gives insurers more time to comply— a 1-, 2- or 3- year extension, depending on the type of entity.
The deferral news has been hailed by many filers that still have significant work to do ahead of adoption. LDTI fundamentally changes how insurers recognize, measure, present and disclose contracts that provide coverage over an extended period, such as life insurance, disability, long term care, and limited annuities or payout annuities. LDTI has a vast impact on data requirements, systems, processes, operations, and internal control. As a result, insurers have struggled to develop workable timelines for adoption.