{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/944/40/#05-overview-and-background","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":"944","topic_title":"Financial Services—Insurance","subtopic":"944-40","subtopic_title":"Claim Costs and Liabilities for Future Policy Benefits","section":{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"944-40-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic provides guidance to insurance entities on accounting for and financial reporting of claims costs and liabilities for future policy benefits. The guidance in this Subtopic is presented in the following five Subsections:<ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\">General</div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\">Short-Duration Contracts</div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\">Long-Duration Contracts</div></li><li class=\"li-norm\"><span class=\"linum\">d</span><div class=\"p\"><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</div></li><li class=\"li-norm\"><span class=\"linum\">e</span><div class=\"p\">Financial Guarantee Insurance Contracts.</div></li></ol></div></div>","snippet":"This Subtopic provides guidance to insurance entities on accounting for and financial reporting of claims costs and liabilities for future policy benefits. The guidance in this Subtopic is presented in the following five…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3480840bfe5b987b065b0e6b4890e9859fb6d312f43646e353d1a3527a6b299f","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}},{"citation":"944-40-05-2","para":"05-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_021FE5C0-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"><a href=\"/glossary/c/#claim-adjustment-expenses\" class=\"term\" title=\"Expenses incurred in the course of investigating and settling claims.\"><span>Claim adjustment expenses</span></a> include costs incurred in the <a href=\"/glossary/c/#claim\" class=\"term\" title=\"A demand for payment of a policy benefit because of the occurrence of an insured event.\"><span>claim</span></a> settlement process such as all of the following: </span></span><ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_021FE738-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Legal fees </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_021FE877-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Outside adjuster fees </span></span></div></li><li class=\"li-norm\"><span class=\"linum\">c</span><div class=\"p\"><span class=\"sfragment\" id=\"sfr_021FE959-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Costs to record, process, and adjust claims. </span></span></div></li></ol></div></div>","snippet":"Claim adjustment expenses include costs incurred in the claim settlement process such as all of the following:\n(a) Legal fees\n(b) Outside adjuster fees\n(c) Costs to record, process, and adjust claims.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9e7318da973504b63211e0cde70acc722e767420b43ef1635359f4172c0e7bd1","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2829cc73845d876dd1b25b9782b892912c851fd5ab64bafeaa4dc40d47771f40","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}},{"block":"Short-Duration Contracts","heading":null,"paragraphs":[{"citation":"944-40-05-3","para":"05-3","html":"<div class=\"asc-body\"><div class=\"norm-text\">The Short-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of short-duration contracts.</div></div>","snippet":"The Short-Duration Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of short-duration contracts.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2f0788522a7c431e9f5be14cb663778ac914b78d5b3d81e30677d0c54cb967d3","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4505326110d2f288ff66e0a7d5cfe54476fa2ad64bc02276a1210969eaefbd1","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}},{"block":"Long-Duration Contracts","heading":null,"paragraphs":[{"citation":"944-40-05-4","para":"05-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">The Long-Duration Contracts Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of the expected cost related to long-duration insurance contracts.</div></div>","snippet":"The Long-Duration Contracts Subsections of this Subtopic provide guidance to insurance entities on accounting for and financial reporting of the expected cost related to long-duration insurance contracts.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9cc28574ccb7a10f24de9d4ce51488baaf9587fbb6a00010a6fa7fff0ffbbd9e","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:77ac2f54576dde928b772aa7d4dbd54d7e16cc36af4cae4e027a679c27ec6e02","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}},{"block":"Reinsurance Contracts","heading":null,"paragraphs":[{"citation":"944-40-05-5","para":"05-5","html":"<div class=\"asc-body\"><div class=\"norm-text\">The Reinsurance Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of <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.</div></div>","snippet":"The Reinsurance Contracts Subsections of this Subtopic provide insurance entities guidance on accounting for and financial reporting of reinsurance contracts.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:666dba26b898ea6a8b96c5e8be435419c0b918b5b009f33b20771a1380192587","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:642eb7425be2adee08b49eea6f05c5aa72b42eef49fbb34dc22f4c54d2c7a5d2","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}},{"block":"Financial Guarantee Insurance Contracts","heading":null,"paragraphs":[{"citation":"944-40-05-6","para":"05-6","html":"<div class=\"asc-body\"><div class=\"norm-text\">The Financial Guarantee Insurance Contracts Subsections of this Subtopic provide guidance on accounting for and financial reporting of claim liabilities for financial guarantee insurance contracts.</div></div>","snippet":"The Financial Guarantee Insurance Contracts Subsections of this Subtopic provide guidance on accounting for and financial reporting of claim liabilities for financial guarantee insurance contracts.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:736d11fd93bda6ebc0fd0d49454b950075c1c857ec6d320cdcc05c2e366c0d10","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:62f25d8532aee21bb3d18296792fc20ebab2d43a310293f9b934b63847724077","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}},{"block":"Financial Guarantee Insurance Contracts","heading":"Information about Insured Financial Obligations","paragraphs":[{"citation":"944-40-05-7","para":"05-7","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_023C4EC4-6E94-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Insurance entities often aggregate information related to the credit standing of their insured financial obligations in a watch list or surveillance list to evaluate credit deterioration in those insured financial obligations. Those lists often are separated into groupings or categories to assist management in identifying varying degrees of credit deterioration of insured financial obligations in its portfolios.</span></span></div></div>","snippet":"Insurance entities often aggregate information related to the credit standing of their insured financial obligations in a watch list or surveillance list to evaluate credit deterioration in those insured financial obliga…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:21d47dd5d977aa6173b6c01c09c3ea524db895cda674c405e6da072967dc9622","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7bcd25e9d24821144ed22607b20044dd38da374b08bd3a4558aaac8bc7da446a","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b84da01027041fc240d620ef151bc66e39a93831cfad7704a6d092ba0320dce7","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b84da01027041fc240d620ef151bc66e39a93831cfad7704a6d092ba0320dce7","downloaded_from":"2026-09-10T02:16:29.572Z","last_downloaded_at":"2026-09-10T02:16:29.572Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479324","source_sha256":"965d55b013be15d018b501901094e49866be5aa555db4ee762dc46995a243c89"}}