# ASC 944-20-10: Financial Services—Insurance — Insurance Activities — 10 Objectives Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/944/20/#10-objectives) 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): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:1ae652847566b948252b4d33852a0ffeb946793338c504dfb5bc98f51a809459 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 944-20-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/944/20/#10-objectives) SEC content: no ##### [944-20-10-1](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:ddc7827471389197bc3162dc6038c8d8c26936581ef363844128b2d81d31c2c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic establishes a framework for accounting by insurance entities based on the nature of insurance contracts rather than type of insurance entity. ##### [944-20-10-2](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:5375270b19ab6e147950de867cea09185e2ff7b949cef6bd058a8e3f5bccef25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Life insurance [coverage](https://asc.understandingaccounting.org/glossary/c/#coverage "An insurance entity's exposure to loss. The concept of coverage would typically include policy limits, deductible, insured, and covered property or insured event.") encompasses the concepts of amounts at risk and the relative probability of [mortality](https://asc.understandingaccounting.org/glossary/m/#mortality "The relative incidence of death in a given time or place.") and [morbidity](https://asc.understandingaccounting.org/glossary/m/#morbidity "The relative incidence of disability due to disease or physical impairment.") events. ##### [944-20-10-3](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:63ffa8ec89664925a4d4acd75b27906ce3f73b2002a053411eb6bd9b65f678f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The insurance model does not override, nor is it inconsistent with, the basic recognition and measurement principles of Subtopic 450-20. Rather, the insurance model is a specialized application of those principles that estimates and allocates revenues and costs that have a future economic benefit over the period in which services are provided or received. For example, that Subtopic prohibits recognition of a loss unless it is [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") that a loss has been incurred, and requires recognition of the full amount of a loss that has been incurred in the period of the loss. Likewise, paragraphs [944-40-25-32](https://asc.understandingaccounting.org/asc/944/40/#944-40-25-32), [944-60-25-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-2), [944-60-25-9](https://asc.understandingaccounting.org/asc/944/60/#944-60-25-9), [944-60-30-1 through 30-2](https://asc.understandingaccounting.org/asc/944/60/#944-60-30-1) , and [944-60-35-3 through 35-5](https://asc.understandingaccounting.org/asc/944/60/#944-60-35-3) require recognition of losses in the period the loss occurs. ### Reinsurance Contracts #### Overall ##### [944-20-10-4](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:40a598138921f56e79a73facfe0f0d95bcebe3705b6c528bfe98b6a61e880a80 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A principal objective of the Reinsurance Contracts Subsections of this Subtopic is to account for an agreement with a [reinsurer](https://asc.understandingaccounting.org/glossary/r/#reinsurer "The assuming entity in a reinsurance transaction.") according to its substance. Difficulty in evaluating a contract under the Reinsurance Contracts Subsections of this Subtopic is an indication that the contract's form and substance may differ. For example, if complicated adjustable features or options are present in a contract, close analysis may be required to determine the effect of those contractual provisions on risk transfer. #### Multiple-Year Retrospectively Rated Contracts ##### [944-20-10-5](https://asc.understandingaccounting.org/asc/944/20/#944-20-10-5) Pending content: no Source downloaded (UTC): 2026-09-10T02:15:03.393Z to 2026-09-10T02:15:03.393Z Record version: sha256:4206394b8a33f6d4a5d084d6b9baf2a2f1288a82a1a5e7c618b1c621d0de8b01 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A retrospectively rated contract is a multiple-year contract in which events in one period of the contract create rights and obligations in another. The principal issues in accounting for a multiple-year retrospectively rated contract involve how to recognize and measure assets and liabilities resulting from the obligatory retrospective rating provisions. While it may be difficult for some types of retrospectively rated contracts to pass the risk transfer test, the recognition and measurement questions are present regardless of whether the contract transfers risk. In fact, the questions become clearly evident with contracts that meet the risk transfer test and are accounted for as [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.").