{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/944/60/#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":"944","topic_title":"Financial Services—Insurance","subtopic":"944-60","subtopic_title":"Premium Deficiency and Loss Recognition","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"944-60-25-1","para":"25-1","html":"
Paragraph 450-20-55-17A states that Subtopic 450-20 does not prohibit (and, in fact, requires) accrual of a net loss (that is, a loss in excess of deferred premiums) that probably will be incurred on insurance policies that are in force, provided that the loss can be reasonably estimated.
","snippet":"Paragraph 450-20-55-17A states that Subtopic 450-20 does not prohibit (and, in fact, requires) accrual of a net loss (that is, a loss in excess of deferred premiums) that probably will be incurred on insurance policies t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb4d3ce3ceeb9761797303c493c1d6703b6634d3e5780f38d9a4b60ab022a215","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},{"citation":"944-60-25-2","para":"25-2","html":"
A probable loss on insurance contracts exists if there is a premium deficiency relating to short-duration or long-duration contracts.
","snippet":"A probable loss on insurance contracts exists if there is a premium deficiency relating to short-duration or long-duration contracts.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1efe338ac123e8bc4cd987d99c4cab2de8ac7335ee2e926d95c177d87ca9aa1b","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},{"citation":"944-60-25-3","para":"25-3","html":"
Insurance contracts shall be grouped consistent with the entity's manner of acquiring, servicing, and measuring the profitability of its insurance contracts to determine if a premium deficiency exists.
","snippet":"Insurance contracts shall be grouped consistent with the entity's manner of acquiring, servicing, and measuring the profitability of its insurance contracts to determine if a premium deficiency exists.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6a872ff80662a5fa59842f8d286acc6a355005a61395964efdee94dfd4b4762d","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e070b2eb3706bdf37a59336cdb538777370a6f768d4f6577d518c3f65f85fcaf","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},{"block":"Short-Duration Contracts","heading":null,"paragraphs":[{"citation":"944-60-25-4","para":"25-4","html":"
A premium deficiency shall be recognized if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs, and maintenance costs exceeds related unearned premiums.
","snippet":"A premium deficiency shall be recognized if the sum of expected claim costs and claim adjustment expenses, expected dividends to policyholders, unamortized acquisition costs, and maintenance costs exceeds related unearne…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb4305c75e11cee1644eb6200f0449aad16e2c2e345150bd0a593614b9c8f330","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},{"citation":"944-60-25-5","para":"25-5","html":"
A premium deficiency shall first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency.
","snippet":"A premium deficiency shall first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:581cd94ff2195f06a54f40dc3c4c7fa46e47e48c9af24e07b5c1e08d3ec55b04","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},{"citation":"944-60-25-6","para":"25-6","html":"
If the premium deficiency is greater than unamortized acquisition costs, a liability shall be accrued for the excess deficiency.
","snippet":"If the premium deficiency is greater than unamortized acquisition costs, a liability shall be accrued for the excess deficiency.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0b9c43f025c9d60a4f9cb25a0e4ed1cf71336ecb7536c97eaae142b5d7cbdcca","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e35e0b35a92f52a49d7804e2d90b86a664bb0ea27e99adf3839d8107e8c80d16","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},{"block":"Long-Duration Contracts","heading":null,"paragraphs":[{"citation":"944-60-25-7","para":"25-7","html":"
Original policy benefit assumptions for certain long-duration contracts ordinarily continue to be used during the periods in which the liability for future policy benefits is accrued under Subtopic 944-40. However, actual experience with respect to investment yields, mortality, morbidity, terminations, or expenses may indicate that existing contract liabilities, together with the present value of future gross premiums, will not be sufficient to do both of the following:
  1. a
    Cover the present value of future benefits to be paid to or on behalf of policyholders and settlement costs relating to a block of long-duration contracts
  2. b
    Recover unamortized present value of future profits.
","snippet":"Original policy benefit assumptions for certain long-duration contracts ordinarily continue to be used during the periods in which the liability for future policy benefits is accrued under Subtopic 944-40. However, actua…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cc2af3f187b6297aca86a57e5a74cb1c24023317fd99ad4a3b73148a8c1927e0","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},{"citation":"944-60-25-8","para":"25-8","html":"
The premium deficiency shall be recognized by a charge to income and either of the following:
  1. a
    A reduction of unamortized present value of future profits
  2. b
    An increase in the liability for future policy benefits.
","snippet":"The premium deficiency shall be recognized by a charge to income and either of the following:\n(a) A reduction of unamortized present value of future profits\n(b) An increase in the liability for future policy benefits.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:24abe308ee356c5151b0695aba8cbdba4195037596cf1eea871934928b3d8a3f","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},{"citation":"944-60-25-9","para":"25-9","html":"
A premium deficiency, at a minimum, shall be recognized if the aggregate liability on an entire line of business is deficient. In some instances, the liability on a particular line of business may not be deficient in the aggregate, but circumstances may be such that profits would be recognized in early years and losses in later years. In those situations, the liability shall be increased by an amount necessary to offset losses that would be recognized in later years.
","snippet":"A premium deficiency, at a minimum, shall be recognized if the aggregate liability on an entire line of business is deficient. In some instances, the liability on a particular line of business may not be deficient in the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c657565222269fb43ef5e82b3a15d4d6a8155aae5537c53ed452adb075085dea","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd4bdb230cc5920bfcb0b32dcbc697e1a2fd37ac787c6301d9661becef9d90a3","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0235e67796427bb9192973d86208704526a18244c29786c970005af2c55fb4dc","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0235e67796427bb9192973d86208704526a18244c29786c970005af2c55fb4dc","downloaded_from":"2026-09-10T02:17:52.429Z","last_downloaded_at":"2026-09-10T02:17:52.429Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479573","source_sha256":"ec300e41b7845fba275caa7a69b40915f4f705725739fe91bd003c9941106b63"}}