# ASC 340-30-25: Other Assets and Deferred Costs — Insurance Contracts That Do Not Transfer Insurance Risk — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/340/30/#25-recognition) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:b20d616f7e2caadf6fd02425c2c15c5bf422495eb27f12cca87104a9b61725f0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/340/30/#25-recognition) SEC content: no #### Deposit Asset or Liability Relating to Insurance and Reinsurance Contracts Accounted for Under Deposit Accounting ##### [340-30-25-1](https://asc.understandingaccounting.org/asc/340/30/#340-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:69695d83180478d03c16cf134d8418eee2d86cc105c237c806a1ef099eb896b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At inception, a deposit asset or liability shall be recognized for insurance and [reinsurance](https://asc.understandingaccounting.org/glossary/r/#reinsurance "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.") contracts accounted for under deposit accounting. ##### [340-30-25-2](https://asc.understandingaccounting.org/asc/340/30/#340-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:0a18d203c60320765bd781633379445e4cc3ab79c685ea8aa7d77c983301f5b3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Sections 340-30-30 and 340-30-35 for guidance relating to the measurement of insurance and reinsurance contracts that transfer: 1. a Only significant [timing risk](https://asc.understandingaccounting.org/glossary/t/#timing-risk "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.") 2. b Neither significant timing nor significant [underwriting risk](https://asc.understandingaccounting.org/glossary/u/#underwriting-risk "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.") 3. c Only significant underwriting risk. #### Insurance and Reinsurance Contracts with Indeterminate Risk ##### [340-30-25-3](https://asc.understandingaccounting.org/asc/340/30/#340-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:29909af9d8ad88328a6504ac1f7dcff15303e5d962d0ff0df32ecb6cda131a4a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 944-605. As a result, that guidance regarding the open-year method shall be followed. ##### [340-30-25-4](https://asc.understandingaccounting.org/asc/340/30/#340-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:63a9e67fe3838fbdda0b9a5db87b1abda428068c41b69ed9d8e164b3cb8b4ba8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [340-30-25-5](https://asc.understandingaccounting.org/asc/340/30/#340-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:daca401161c682f22b405ba2eb72d1d4da7586eeecbdfa692a6563ee3c7afe90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The open-year method shall not, however, be used to defer losses that otherwise would be recognized pursuant to Subtopic 450-20. ##### [340-30-25-6](https://asc.understandingaccounting.org/asc/340/30/#340-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:604c960910b49aa21ad4c4701034ebb0e913797cb5a786e318a70856cf137ad7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 appropriate, and accounted for accordingly: 1. a Transfers that have neither significant timing nor significant underwriting risk 2. b Transfers that have only significant timing risk 3. c Transfers that have only significant underwriting risk. ##### [340-30-25-7](https://asc.understandingaccounting.org/asc/340/30/#340-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:d2257de6bec56f83c62c13d9b5332c988213a6160a3b594388ed202596b4023a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. #### Short-Duration Reinsurance Contracts ##### [340-30-25-8](https://asc.understandingaccounting.org/asc/340/30/#340-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:55:49.483Z to 2026-09-09T23:55:49.483Z Record version: sha256:b63886d44616b22ffe1a80eef833a8f28dbc7487c894783fff8b86136e96406b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a short-duration reinsurance contract does not meet either the condition in paragraph [944-20-15-41](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-41) or the exception in paragraph [944-20-15-53](https://asc.understandingaccounting.org/asc/944/20/#944-20-15-53) but transfers significant [insurance risk](https://asc.understandingaccounting.org/glossary/i/#insurance-risk "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."), then the accounting for contracts that transfer only significant underwriting risk shall be followed as discussed in paragraphs [340-30-35-5 through 35-7](https://asc.understandingaccounting.org/asc/340/30/#340-30-35-5) and [340-30-45-3 through 45-5](https://asc.understandingaccounting.org/asc/340/30/#340-30-45-3) .