claims development disclosure

Industry1

1. 944-40Claim Costs and Liabilities for Future Policy Benefits944 Financial Services—Insurance

   ASC 944-40 governs how insurance entities recognize and measure claim costs and liabilities for future policy benefits, with separate subsections for short-duration contracts, long-duration contracts, reinsurance contracts, and financial guarantee insurance contracts. Its core rules are that liabilities for unpaid claims (including IBNR) and claim adjustment expenses are accrued when insured events occur, and that a liability for future policy benefits—the present value of future benefits and related expenses less the present value of future net premiums—is accrued when premium revenue is recognized. Post-ASU 2018-12, cash flow assumptions are updated at least annually with remeasurement gains/losses in net income, the discount rate is an upper-medium grade (low-credit-risk) fixed-income yield updated each reporting date through OCI, and market risk benefits are measured at fair value.