{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/340/30/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"340","topic_title":"Other Assets and Deferred Costs","subtopic":"340-30","subtopic_title":"Insurance Contracts That Do Not Transfer Insurance Risk","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Deposit Asset or Liability Relating to Insurance and Reinsurance Contracts Accounted for Under Deposit Accounting","paragraphs":[{"citation":"340-30-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_6758AE38-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">At inception, a deposit asset or liability shall be recognized for insurance and <a href=\"/glossary/r/#reinsurance\" class=\"term\" title=\"A transaction in which a reinsurer (assuming entity), for a consideration (premium), assumes all or part of a risk undertaken originally by another insurer (ceding entity). For indemnity reinsurance, the legal rights of the insured are not affected by the reinsurance transaction and the insurance entity issuing the insurance contract remains liable to the insured for payment of policy benefits. Assumption or novation reinsurance contracts that are legal replacements of one insurer by another extinguish the ceding entity's liability to the policyholder.\"><span>reinsurance</span></a> contracts accounted for under deposit accounting. </span></span> </div> </div>","snippet":"At inception, a deposit asset or liability shall be recognized for insurance and reinsurance contracts accounted for under deposit accounting.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:69695d83180478d03c16cf134d8418eee2d86cc105c237c806a1ef099eb896b9","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}},{"citation":"340-30-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">See Sections <a altsource=\"GUID-D6B44B86-0005-4475-8B2C-6ABA6DA5CF77.ditamap\" class=\"ditamap\">340-30-30</a> and <a altsource=\"GUID-CBBD8446-CB17-4BBB-9CB0-0E51589B0A97.ditamap\" class=\"ditamap\">340-30-35</a> for guidance relating to the measurement of insurance and reinsurance contracts that transfer:<ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\">Only significant <a href=\"/glossary/t/#timing-risk\" class=\"term\" title=\"The risk arising from uncertainties about the timing of the receipt and payments of the net cash flows from premiums, commissions, claims, and claim settlement expenses paid under a contract.\"><span>timing risk</span></a></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\">Neither significant timing nor significant <a href=\"/glossary/u/#underwriting-risk\" class=\"term\" title=\"The risk arising from uncertainties about the ultimate amount of net cash flows from premiums, commissions, claims, and claim settlement expenses paid under a contract.\"><span>underwriting risk</span></a></div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\">Only significant underwriting risk.</div></li></ol></div> </div>","snippet":"See Sections 340-30-30 and 340-30-35 for guidance relating to the measurement of insurance and reinsurance contracts that transfer:\n(a) Only significant timing risk\n(b) Neither significant timing nor significant underwri…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0a18d203c60320765bd781633379445e4cc3ab79c685ea8aa7d77c983301f5b3","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:45916b563de754ad1749e8725cdeebc324dc4d1dd7f0d5d5437aee3ea6369c77","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}},{"block":null,"heading":"Insurance and Reinsurance Contracts with Indeterminate Risk","paragraphs":[{"citation":"340-30-25-3","para":"25-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_6758AFA9-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Uncertainties surrounding insurance and reinsurance contracts with indeterminate risk are analogous to those often associated with foreign property and liability reinsurance as addressed in the Reinsurance Contracts Subsections of Subtopic <a altsource=\"GUID-B28098E8-1C6A-430C-95EB-6E3A66A9688A.ditamap\" class=\"ditamap\">944-605</a>. As a result, that guidance regarding the open-year method shall be followed.</span></span> </div> </div>","snippet":"Uncertainties surrounding insurance and reinsurance contracts with indeterminate risk are analogous to those often associated with foreign property and liability reinsurance as addressed in the Reinsurance Contracts Subs…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:29909af9d8ad88328a6504ac1f7dcff15303e5d962d0ff0df32ecb6cda131a4a","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}},{"citation":"340-30-25-4","para":"25-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_6758B09A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Under the open-year method, the effects of the contracts are not included in the determination of net income until sufficient information becomes available to reasonably estimate and allocate premiums. The open-year method requires that these effects be aggregated in the balance sheet. </span></span> </div> </div>","snippet":"Under the open-year method, the effects of the contracts are not included in the determination of net income until sufficient information becomes available to reasonably estimate and allocate premiums. The open-year meth…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:63a9e67fe3838fbdda0b9a5db87b1abda428068c41b69ed9d8e164b3cb8b4ba8","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}},{"citation":"340-30-25-5","para":"25-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_6758B16A-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The open-year method shall not, however, be used to defer losses that otherwise would be recognized pursuant to Subtopic <a altsource=\"GUID-E13146CA-1337-48D7-BF5C-574604DA8631.ditamap\" class=\"ditamap\">450-20</a>. </span></span> </div> </div>","snippet":"The open-year method shall not, however, be used to defer losses that otherwise would be recognized pursuant to Subtopic 450-20.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:daca401161c682f22b405ba2eb72d1d4da7586eeecbdfa692a6563ee3c7afe90","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}},{"citation":"340-30-25-6","para":"25-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_6758B249-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If sufficient information becomes available to reasonably estimate and allocate premiums, the insurance or reinsurance contract with indeterminate risk shall be reclassified into one of the three following categories,</span></span> <span class=\"sfragment\" id=\"sfr_6758B321-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"> as appropriate, and accounted for accordingly: </span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_6758B445-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Transfers that have neither significant timing nor significant underwriting risk</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_6758B550-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Transfers that have only significant timing risk</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_6758B663-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Transfers that have only significant underwriting risk. </span></span> </div> </li> </ol> </div> </div>","snippet":"If sufficient information becomes available to reasonably estimate and allocate premiums, the insurance or reinsurance contract with indeterminate risk shall be reclassified into one of the three following categories, as…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:604c960910b49aa21ad4c4701034ebb0e913797cb5a786e318a70856cf137ad7","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}},{"citation":"340-30-25-7","para":"25-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_6758B780-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The change in deposit assets or liabilities that result if sufficient information becomes available is treated as a change in accounting estimate in accordance with Topic <a altsource=\"GUID-2C19D78B-1169-4772-A984-E4C872339081.ditamap\" class=\"ditamap\">250</a>. </span></span> </div> </div>","snippet":"The change in deposit assets or liabilities that result if sufficient information becomes available is treated as a change in accounting estimate in accordance with Topic 250.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d2257de6bec56f83c62c13d9b5332c988213a6160a3b594388ed202596b4023a","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7ffeba8c8f46db34a5db881851b20e4068b233d064495fc0897e344ba5e43097","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}},{"block":null,"heading":"Short-Duration Reinsurance Contracts","paragraphs":[{"citation":"340-30-25-8","para":"25-8","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_6758B8C9-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If a short-duration reinsurance contract does not meet either the condition in paragraph <a href=\"/asc/944/20/#944-20-15-41\" class=\"xref\">944-20-15-41</a> or the exception in paragraph <a href=\"/asc/944/20/#944-20-15-53\" class=\"xref\">944-20-15-53</a> but transfers significant <a href=\"/glossary/i/#insurance-risk\" class=\"term\" title=\"The risk arising from uncertainties about both underwriting risk and timing risk. Actual or imputed investment returns are not an element of insurance risk. Insurance risk is fortuitous; the possibility of adverse events occurring is outside the control of the insured.\"><span>insurance risk</span></a>, then the accounting for contracts that transfer only significant underwriting risk shall be followed as discussed in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/340/30/#340-30-35-5\" class=\"xref\">340-30-35-5 through 35-7</a></div> and <div class=\"xref-range displayInline\"><a href=\"/asc/340/30/#340-30-45-3\" class=\"xref\">340-30-45-3 through 45-5</a></div>.</span></span> </div> </div>","snippet":"If a short-duration reinsurance contract does not meet either the condition in paragraph 944-20-15-41 or the exception in paragraph 944-20-15-53 but transfers significant insurance risk, then the accounting for contracts…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b63886d44616b22ffe1a80eef833a8f28dbc7487c894783fff8b86136e96406b","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2385849bf8d88e814944b10e976efe4db6bb8742819dfb889bf9acb37de13813","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b20d616f7e2caadf6fd02425c2c15c5bf422495eb27f12cca87104a9b61725f0","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b20d616f7e2caadf6fd02425c2c15c5bf422495eb27f12cca87104a9b61725f0","downloaded_from":"2026-09-09T23:55:49.483Z","last_downloaded_at":"2026-09-09T23:55:49.483Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147482961","source_sha256":"92d473d433ac202ddeabf668dc4beb07a52b649f38f6a8f790a99c77396dcc3f"}}