{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/944/60/#35-subsequent-measurement","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":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"944-60-35-1","para":"35-1","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. Paragraph 944-60-25-4 states that 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. Paragraph 944-60-25-5 states that a premium deficiency shall first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. Paragraph 944-60-25-6 states that, if the premium deficiency is greater than unamortized acquisition costs, a liability shall be accrued for the excess deficiency. If a premium deficiency does occur, future changes in the liability shall be based on the revised assumptions. No loss shall be reported currently if it results in creating future income. The liability for future policy benefits using revised assumptions based on actual and anticipated experience shall be estimated periodically for comparison with the liability for future policy benefits (reduced by the unamortized present value of future profits) at the valuation date. The guidance in this Subsection shall not be applied to investment contracts (see the Investment Contracts Subsections of Subtopic 944-825). Such loss recognition is not permitted.