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Get a clear, practical overview of ASC 944 for short-duration contracts. Learn key requirements, disclosures, and steps for smooth ASC 944 compliance.
New accounting standards can feel like a constant hurdle, and ASC 944 is a big one. It completely changes how insurers report on short-duration contracts. If you're trying to understand the 'asc insurance meaning' without getting lost in technical jargon, you're in the right place. This guide cuts through the complexity. We'll give you a clear overview of ASC 944's impact, its key requirements for any short term agreement, and the practical steps you need for a smooth implementation. Consider this your straightforward path to compliance.
Let's break down ASC 944 and see how it impacts insurance contracts.
ASC 944 lays out the guidelines for how insurance companies should handle their accounting. Think of it as the rulebook for reporting financial information related to insurance activities. It covers everything from how to define insurance contracts to how to present this information in your financial statements.
This standard is divided into several sections, each tackling a specific aspect of insurance accounting. For instance, ASC 944-10 sets the stage by defining the scope of the standard and providing a roadmap of its subtopics. Meanwhile, ASC 944-20 dives into the specifics of what constitutes insurance activities and contracts. This section also clarifies the accounting treatment for contracts that don't involve the traditional transfer of insurance risk.
So, who needs to pay attention to ASC 944? Simply put, this standard is the accounting playbook specifically for insurance companies. If your business involves issuing insurance contracts, these are the rules you follow. ASC 944 dictates how you report your income, costs, and all the other financial details tied to those contracts. It ensures that everyone in the insurance industry is speaking the same financial language, making reports consistent and comparable. Getting this right is fundamental to maintaining compliance and providing a clear picture of your company's financial health to stakeholders, auditors, and regulators. For a deeper look, you can explore our ultimate guide to insurance revenue.
One of the most important ideas within ASC 944 is the principle of "substance over form." This means you need to look beyond the legal jargon of a contract and focus on its real-world economic impact. It’s about what the agreement *actually does*, not just what it says on paper. This approach ensures that financial reports accurately reflect the company's true financial position and the risks it has taken on. By prioritizing the economic reality of a transaction, you provide a more transparent and honest view of your business, which is essential for building trust and making strategic decisions based on solid financial insights.
ASC 944 is organized into several key parts, called Subtopics, that cover the entire lifecycle of an insurance contract. Think of it as a comprehensive guide with different chapters for each major area. It starts with general rules (ASC 944-10) and then moves into specifics like accounting for different contract types (ASC 944-20) and handling the costs of acquiring new customers (ASC 944-30). Other sections address how to account for future policyholder claims (ASC 944-40), manage premium deficiencies (ASC 944-60), and handle special separate accounts (ASC 944-80). Having a clear structure helps, but managing the data across all these areas requires seamless integrations between your systems to ensure accuracy.
Why is ASC 944 so important for the insurance industry? In a nutshell, it brings a new level of transparency to financial reporting.
Before ASC 944, understanding the ins and outs of an insurer's financial health wasn't always straightforward. This standard changed the game by requiring companies to disclose more information about their short-duration contracts. This includes details about potential claims and the timing of payments.
This transparency is essential for investors and analysts who rely on this information to make informed decisions. Plus, it helps ensure that insurance companies are all playing by the same rules, making it easier to compare their performance.
Let's break down how to pinpoint if a contract falls under the category of short-duration under ASC 944.
The most straightforward factor? The length of the contract itself. Short-duration contracts are usually those expected to be completed within a year. Think about contracts with coverage for a set timeframe, like one year or less. These are common in property and casualty insurance. For example, a standard homeowners insurance policy that provides coverage for a year would typically be considered a short-duration contract.
Here's where it gets a little more nuanced. ASC 944 lays out specific criteria to determine if a contract truly involves risk transfer, a fundamental aspect of insurance. You can dig deeper into these requirements in the PwC Viewpoint guide. This is essential to differentiate between genuine insurance contracts and other types of agreements.
So, what happens when a contract doesn't quite meet the risk transfer criteria? That's where deposit accounting comes into play. Think of it this way: if an insurance contract doesn't actually transfer significant risk from the policyholder to the insurer, it's treated more like a deposit than a standard insurance policy under accounting rules. This isn't just a minor detail; it's a critical distinction for accurate financial reporting and a key component of maintaining ASC 944 compliance. Getting this classification wrong can lead to misstated financials and potential audit issues down the line.
The most significant implication of deposit accounting is how you handle premiums. Instead of recognizing them as revenue immediately, you record them as a liability on your balance sheet. The funds are essentially held in trust until the risk is effectively transferred or the contract period ends. This directly impacts the presentation of your company's financial health, as it shifts what might have been seen as income into a liability. Correctly identifying and accounting for these contracts from the start is essential. This is where having robust systems that can automate these complex recognition rules becomes invaluable, ensuring your data flows correctly from your CRM and ERP into your financial statements.
How you recognize premiums is a major element of ASC 944. In short-duration contracts, premiums are recorded as revenue (earned premium) when they are written. This aligns with the sales effort and ensures your financial reporting accurately reflects the premium revenue earned. This practice is crucial for painting a clear picture of financial performance under ASC 944.
Once you've determined that a contract falls under ASC 944, the next step is to apply the specific accounting treatments it requires. These rules are designed to ensure that revenue and expenses are recognized in a way that accurately reflects the insurer's financial position. From handling the initial costs of acquiring a policy to managing potential shortfalls down the line, ASC 944 provides a clear framework. Let's walk through some of the most important treatments you'll need to master.
When an insurance company acquires a new contract, there are always associated costs, like agent commissions or underwriting expenses. ASC 944 provides specific guidance on how to account for the costs incurred to acquire new insurance contracts. Instead of expensing these costs immediately, they must be capitalized and then amortized over the life of the contract. This approach matches the expenses with the revenue they help generate, giving a much more accurate view of a contract's profitability over time. Think of it as spreading the cost of a new customer across the entire period they're expected to pay premiums.
Sometimes, the future looks a bit different than you initially planned. Under ASC 944, if the premiums you expect to collect won't be enough to cover future claims and expenses, you must recognize a premium deficiency. This requires a detailed analysis of projected cash flows to identify any potential shortfalls. If a deficiency is found, you may need to set up a reserve to cover it. This is a crucial, forward-looking requirement that demands robust data and forecasting capabilities to ensure your company remains financially sound and can meet its obligations to policyholders.
Policyholder dividends are a way for insurers to share profits with their policyholders. ASC 944 outlines exactly how to account for policyholder dividends, stating they should be recognized as a liability as soon as they are declared. This means the moment the company commits to paying the dividend, it becomes an official obligation on the books, even if the cash hasn't been paid out yet. This rule ensures that financial statements provide a transparent and timely picture of the company's commitments, preventing any surprises for investors or regulators.
Many insurance companies manage separate accounts, which hold assets for the benefit of specific policyholders, often in connection with products like variable annuities. ASC 944 requires insurers to disclose the fair value of assets held in these accounts. This detailed reporting is all about transparency. It ensures that policyholders, investors, and regulators have a clear understanding of the value of these assets and how they are being managed, reinforcing trust and ensuring compliance with industry standards.
Transparency is key when it comes to financial reporting, and short-duration contracts are no exception. Let's break down the disclosure requirements outlined in ASC 944.
ASC 944 requires a structured approach to reporting claims development. This information helps stakeholders understand how claims mature over time, providing insights into an insurer's profitability and reserving practices. You'll need to present this data for up to 10 years, with a focus on the most recent reporting period. This long-term view allows for a thorough analysis of trends and the insurer's performance.
When reporting on incurred and paid claims, clarity is essential. ASC 944 mandates that you disclose this information separately, providing further details about claim activity for both the current and prior accident years. This detailed breakdown ensures that anyone reviewing your financials can easily understand your company's liabilities and cash flow.
The claims development table itself needs to follow a specific format. It should be presented annually, on a disaggregated basis, undiscounted, by accident year, net of reinsurance, and with separate amounts for incurred and paid claims. This standardized presentation promotes transparency and makes it easier to compare your company's performance across different reporting periods.
Don't just present a lump sum of data – break it down. ASC 944 emphasizes the importance of disaggregating claims development information into relevant categories. Think about categorizing by type of coverage, geography, reportable segment, market or type of customer, and claim duration.
Disaggregating your data like this provides more useful insights into your company's performance across different segments. It's about painting a clear picture for stakeholders, ensuring that important details aren't hidden within aggregated data points.
When you're dealing with insurance contracts, it's not just about the claims. ASC 944 also has specific rules for how you talk about market risk benefits and separate accounts in your financial statements. These aren't just minor details; they're key pieces of the puzzle that show how well an insurer is managing its promises to policyholders. Think of these disclosures as a commitment to transparency. They give stakeholders a clear line of sight into an insurer's financial obligations and the specific assets that are earmarked to cover them. Nailing these disclosures is fundamental for building trust and staying on the right side of compliance.
ASC 944 is all about clarity, and that means you can't hide market risk benefits among other liabilities on your balance sheet. The standard requires them to have their own dedicated line item. It’s like giving them their own spotlight so they can’t be missed. This isn't just for show; it serves a critical purpose. By separating these benefits, you give investors, regulators, and other stakeholders a direct look at the financial weight of these promises. It makes it much easier for them to assess the company's exposure to market volatility and understand the specific risks tied to these products. It’s a non-negotiable step toward full financial transparency.
Market risk benefits don't sit still; their value ebbs and flows with the market. ASC 944 requires you to report these changes in fair value directly in your net income for the period. You can't tuck these fluctuations away in "other comprehensive income" where they might be overlooked. This rule forces a real-time reflection of how market movements are impacting the company's bottom line. It provides a much more dynamic and honest picture of financial performance. When stakeholders look at your income statement, they can immediately see the gains or losses tied to these benefits, giving them a clearer understanding of the company's profitability and risk management.
To show how the value of market risk benefits changes over time, ASC 944 requires a detailed reconciliation table. This table acts as a bridge, connecting the opening balance at the start of the period to the closing balance at the end. It meticulously breaks down every movement, including new benefits issued, payments made, and shifts in fair value. Pulling all this information together manually can be a massive headache and a recipe for errors. This is where automated systems become invaluable. Having a platform with seamless integrations to your various data sources ensures you can generate these tables accurately and efficiently, saving your team from tedious manual work and reducing the risk of compliance missteps.
Lastly, ASC 944 shines a light on "separate accounts." Insurers must disclose the total fair value of any assets held in these accounts. Think of a separate account as a protected fund, walled off from the company's general pool of assets. It’s specifically designed to back the benefits of certain products, like variable annuities, where the policyholder's return is tied to the performance of the underlying investments. By requiring this disclosure, the standard ensures stakeholders can see exactly what resources are set aside to meet these specific obligations. It provides assurance that the money is there to fulfill promises made to policyholders, offering a crucial layer of transparency and security.
Once you determine a contract falls under ASC 944, presenting that information clearly is essential. Let's break down how to handle these contracts on your balance sheet, income statement, and in the notes to your financial statements.
ASC 944 provides guidance on presenting certain items related to short-duration contracts on your balance sheet. For instance, you'll need to correctly classify unearned premiums as liabilities since they represent services you haven't yet provided.
When it comes to your income statement, accurately recognizing revenue is key. Premiums, for example, are recognized as revenue (earned premium) over the period the insurance coverage is provided. To clearly show this process, many insurance entities present written premium as a separate line item on their income statement. This approach helps reflect sales efforts and offers a clear path for reconciling to the total premium revenue earned.
Think of the notes to your financial statements as the place to provide context and transparency. The disclosures required under ASC 944 give anyone reviewing your financials a clear picture of the amount, timing, and even uncertainty of cash flows related to your liabilities. For example, you'll want to clearly lay out the methodologies you use for determining IBNR (Incurred But Not Reported) claims and claim frequency. Plus, disclose any significant changes to these methodologies.
Reinsurance is a critical component of the insurance industry, but its accounting treatment can be complex. It involves specific rules under ASC 944 that ensure the transactions are reported correctly. Let's walk through the fundamentals of reinsurance and how it fits into your financial reporting.
Think of reinsurance as insurance for insurance companies. It’s a practice where an insurance company, known as the "ceding company," transfers a portion of its risk portfolio to another company, the "reinsurer." By doing this, the original insurer can protect itself from the financial strain of major claims, like those resulting from a natural disaster. This process is fundamental to managing risk and maintaining financial stability within the industry. The core principle is the transfer of significant risk; for a contract to be treated as reinsurance for accounting purposes, it must genuinely shift risk from the ceding company to the reinsurer.
Understanding reinsurance involves a few key terms. The "ceding company" is the insurer that buys the reinsurance policy, while the "reinsurer" is the company that sells it. This arrangement isn't just about offloading risk; it offers several strategic advantages. Reinsurance helps insurers stabilize their income by smoothing out the impact of large, unexpected losses. It also increases their capacity, allowing them to take on more policies than their own capital would otherwise permit. Furthermore, it can provide access to the reinsurer's expertise in specific or unusual risk areas, which is a valuable asset in a constantly changing market.
Reinsurance isn't a one-size-fits-all solution. Contracts are structured in different ways to meet specific needs. The two primary categories are facultative and treaty reinsurance. Facultative reinsurance is used to cover a single, specific risk or policy. This is often used for policies that are particularly large or unusual and fall outside the insurer's normal risk appetite. In contrast, treaty reinsurance covers a whole portfolio or "book" of an insurer's business. For example, a treaty might cover all of an insurer's auto policies in a certain state, providing broad protection for a defined class of risk over a set period.
Within these contract types, the financial arrangement can also vary. In proportional reinsurance, the ceding company and the reinsurer agree to share premiums and losses based on a fixed percentage. If the reinsurer takes on 30% of the risk, they receive 30% of the premium and are responsible for 30% of the losses. Non-proportional reinsurance, also known as "excess of loss," works differently. Here, the reinsurer only steps in to pay once the ceding company's losses exceed a predetermined amount, or "retention." This structure protects the primary insurer from catastrophic events that lead to exceptionally high claims.
ASC 944 sets specific rules for reinsurance to ensure financial statements accurately reflect these transactions. The most important rule is that the contract must involve a genuine and significant transfer of risk. If it doesn't, it's treated as a deposit rather than a reinsurance agreement. Managing the data to prove risk transfer and comply with these rules can be challenging, which is why many companies rely on automated systems to ensure their data flows seamlessly between platforms for accurate reporting. This helps maintain compliance and provides a clear audit trail for every transaction.
The timing of the losses covered also dictates the accounting treatment. Prospective reinsurance covers losses that may occur in the future, on policies that are either new or already in effect. This is the most common type of reinsurance. Retroactive reinsurance, on the other hand, covers losses that have already happened but may not have been fully settled. This is a more specialized product used to manage liabilities from past events, and it has its own distinct set of accounting rules under ASC 944 to prevent companies from manipulating their earnings.
Timeliness is also a factor in compliance. ASC 944 includes a "9-month rule," which mandates that a reinsurance contract must be finalized and signed within nine months of the effective date of the policy it covers. This rule is in place to ensure that the reinsurance agreement is part of the original risk management strategy and not a retroactive attempt to cover unexpected losses after the fact. Failing to meet this deadline can result in the contract not qualifying for reinsurance accounting treatment, which can have significant financial reporting implications.
When a ceding company transfers risk, it creates a new risk: counterparty credit risk. The insurer is now depending on the reinsurer's ability to pay its share of claims, which could be years down the road. Because of this, ASC 944 requires insurers to regularly evaluate the financial health and solvency of their reinsurers. If a reinsurer's financial strength deteriorates, the ceding company must account for the potential that it may not be able to collect the amounts due. This involves setting up an allowance for uncollectible reinsurance receivables, which directly impacts the insurer's balance sheet.
Let's make this a little more concrete. Here are a few examples of short-duration contracts across different insurance sectors:
Think about a straightforward homeowner's insurance policy. These policies typically cover a period of one year, and the insurer agrees to cover certain risks, like damage from fire or theft, during that time. This type of contract fits the short-duration definition because the coverage period is limited, and the insurer's obligation to pay claims ends when the contract expires. Reinsurance contracts, specifically quota share contracts that meet specific risk transfer criteria, also fall under this category.
In health insurance, short-duration contracts are common. Group short-term disability policies are a good example. These policies provide coverage for a defined period, usually less than a year, if an employee can't work due to a disability. The temporary nature of these policies, along with the need for transparent financial reporting, makes them subject to the guidelines outlined in ASC 944.
We've all seen those ads at the airport, right? Travel insurance is another classic example of a short-duration contract. Whether it's trip cancellation coverage or protection against lost luggage, these policies are designed to cover risks associated with a specific trip, making them short-term by nature. Just like the other examples, travel insurance contracts need to meet specific disclosure requirements to ensure clarity in financial reporting.
While ASC 944 aims to bring clarity and consistency to insurance reporting, implementing its provisions for short-duration contracts presents unique challenges for insurers. Let's examine some of these hurdles:
Successfully adopting ASC 944 hinges on an insurer's ability to collect, manage, and analyze substantial amounts of granular data. This data encompasses contract details, premium information, claims experience, and more. Without a robust data management system, insurers risk encountering inaccuracies, inconsistencies, and reporting errors. As Moody's points out, modernizing infrastructure and enhancing analytical capabilities are essential for insurers to effectively manage data and extract valuable insights.
Many insurers grapple with fragmented data systems, with information siloed across different departments and software platforms. This lack of integration poses a significant challenge when implementing ASC 944, as it requires a holistic view of short-duration contracts and their associated financial data. Deloitte Insights emphasizes the importance of treating data as a strategic asset and nurturing it for long-term, enterprise-wide gains. This approach can help overcome integration issues and facilitate compliance with ASC 944.
ASC 944 introduces specific and detailed disclosure requirements for short-duration contracts. These requirements can be complex and nuanced, leading to misinterpretations if not carefully navigated. The Actuarial Society of America cautions against relying solely on reference materials and emphasizes the importance of seeking expert guidance to ensure accurate interpretation and application of the regulations.
Accurately assessing risk transfer is crucial in determining the appropriate accounting treatment for short-duration contracts under ASC 944. As PwC notes, the standard emphasizes substance over form, requiring insurers to look beyond contractual language and analyze the underlying economic realities of the risk transfer. This assessment can be complex, demanding a thorough understanding of the contract terms, reinsurance arrangements, and associated risks.
Successfully navigating the intricacies of ASC 944 requires a proactive and strategic approach. Here are some best practices to help your insurance business maintain compliance:
Having the right data at your fingertips is crucial for ASC 944 compliance. You can't analyze what you can't access. As Moody's points out, "developing a strategic approach to data management, modernizing infrastructure, and enhancing analytical capabilities can help the insurance industry create value for its customers and stakeholders." This means establishing a system that can accurately capture, store, and aggregate policy data, claims experience, and other relevant financial information.
Don't leave ASC 944 compliance to chance. Clearly documented procedures ensure everyone on your team understands their responsibilities. This includes outlining steps for data collection, revenue recognition, and disclosure preparation. As we highlighted in our article on Mastering Insurance Premium Revenue Recognition for ASC 944 Compliance, "understanding ASC 944 requirements, steps to ensure compliance, and common pitfalls to avoid are essential for maintaining financial accuracy and regulatory adherence."
Let's face it, managing short-duration contracts manually is messy and inefficient. Embrace technology solutions designed specifically for ASC 944 compliance. Think automation! These tools can streamline data collection, automate revenue calculations, and generate reports, freeing up your team to focus on more strategic tasks. As Duck Creek highlights, "by leveraging advanced data analytics, insurers can [gain deeper insights into] their portfolio, identifying and categorizing risk profiles with an unprecedented level of detail."
Wrestling with spreadsheets to manage ASC 944 compliance can be a major time drain and a source of errors. This is where specialized software comes in, automating tasks and giving you a clear, up-to-date picture of your finances. A dedicated platform can handle the heavy lifting by pulling data from various sources, automating complex revenue calculations, and generating the detailed reports you need for disclosures. This not only ensures accuracy but also frees up your team to focus on strategic analysis instead of manual data entry. For example, platforms like HubiFi offer seamless integrations with your existing financial stack, streamlining the entire process from data collection to final reporting.
ASC 944 isn't a "set it and forget it" situation. Regular training ensures your team stays up-to-date on the latest guidelines and best practices. Additionally, periodic internal audits help identify and address any compliance gaps. Think of these audits as routine check-ups for your financial reporting.
Even with the best intentions, companies can make mistakes when implementing ASC 944. To help you avoid potential pitfalls, let's take a look at some of the most common ones:
It's a common mistake for insurers to view data as a short-term expense rather than a valuable asset. Many companies don't have systems in place to collect and organize the granular data required for ASC 944 compliance. As Deloitte points out in their report, "Insurance data as a strategic asset," this mindset can be a real roadblock. To comply with ASC 944, you need comprehensive data on premiums, claims, and other contract details. If your data collection processes are fragmented or incomplete, you'll struggle to meet the standard's requirements.
Don't let the word "short-duration" fool you—implementing ASC 944 for these contracts can be surprisingly complex. The Actuarial Society of America emphasizes that their white paper, "Considerations in Implementing the FASB Short-Duration Contract Disclosures," is meant as a reference and not a replacement for a thorough analysis. Companies often underestimate the time, resources, and expertise needed for a smooth transition. This can lead to rushed implementations, oversights, and potential compliance issues down the line.
ASC 944 compliance isn't just an accounting issue—it impacts various departments across your organization. A siloed approach, where departments aren't communicating effectively, can create inconsistencies and inaccuracies in your reporting. As Deloitte highlights in their "Insurance Accounting and Financial Reporting Update," the focus of this standard is on disclosures. To present a cohesive and accurate financial picture, you need seamless collaboration between finance, actuarial, IT, and other relevant teams.
Okay, let's break down how ASC 944 specifically changes the game for insurance industry reporting.
ASC 944 brings in stricter rules about what insurance companies need to share in their financial statements. Think of it like this: it's pulling back the curtain on cash flow. ASC 944 introduces disclosure requirements that aim to provide a clear view of the amount, timing, and even the uncertainty of cash flow from their liabilities. This is huge for comparing different insurance companies – everyone's playing by the same rules, making informed decisions way easier.
Here's where things get really interesting for anyone who analyzes financial statements. ASC 944 requires insurers to break down their claims development information into very specific categories. We're talking about the type of coverage, location, customer type, and even how long a claim takes to process. This granular level of detail is like having a financial x-ray – analysts can suddenly see the risk and performance of different parts of an insurance portfolio with much more precision. This leads to more accurate financial analysis and forecasting.
Let's be real, no one loves dealing with regulations, but ASC 944 actually makes things a bit more straightforward. Insurance companies under the SEC's watchful eye (specifically those subject to Regulation S-X Article 7) will find specific guidelines within ASC 944 that make compliance much smoother. The guidance on presenting short-duration contracts on balance sheets and income statements is super clear, which helps maintain transparency and builds trust with investors and regulators.
Accounting standards don't operate in isolation, and ASC 944 is no exception. It's crucial to understand how this standard works alongside other major guidelines, particularly because many insurance companies have diverse revenue streams that go beyond traditional policies. This interaction can get complicated, but knowing the boundaries between different standards is the foundation of accurate financial reporting. Let's break down how ASC 944 compares to the broader ASC 606 revenue recognition standard and discuss why staying on top of recent updates from regulatory bodies like the FASB is so critical for maintaining compliance in a constantly shifting landscape.
At first glance, ASC 944 and ASC 606 might seem to cover similar ground, but they serve very different functions. ASC 606 is the comprehensive standard for recognizing revenue from contracts with customers across most industries. However, it specifically carves out exceptions for certain types of contracts, including most insurance contracts. That's where ASC 944 comes in, providing the specific accounting rules for insurance activities. The key distinction is that if a contract involves significant insurance risk, it falls under ASC 944. But many insurers offer more than just traditional policies; they might provide administrative services or other non-insurance products. Revenue from those activities would likely fall under the guidelines of ASC 606, making it essential to have systems that can correctly categorize and account for each revenue stream.
The world of accounting is always changing, and the standards governing the insurance industry are no exception. The Financial Accounting Standards Board (FASB) regularly issues updates that can significantly alter reporting requirements. A major recent example is the introduction of Long-Duration Targeted Improvements (LDTI), which overhauled the accounting for long-duration contracts. While our focus here is on short-duration contracts, changes like LDTI highlight the dynamic nature of financial regulations. Staying informed about these updates is non-negotiable for maintaining compliance and ensuring your financial reporting is accurate. This continuous evolution underscores the need for adaptable accounting processes and systems that can keep pace with new rules as they are released, helping you stay ahead of compliance challenges.
What exactly are short-duration contracts in the context of insurance?
These are insurance contracts with a shorter coverage period, typically a year or less. Think about policies like homeowner's insurance or travel insurance. The key is that the insurance company's responsibility to cover potential losses ends when the contract expires.
How does ASC 944 change how I need to report financial information?
Get ready for more detailed reporting, especially when it comes to claims. You'll need to provide a breakdown of claims information over several years, categorized by things like coverage type and location. This helps paint a clearer picture of your company's financial health.
Our data systems are a bit messy. Any advice on handling the data requirements of ASC 944?
You're not alone! Many companies find that their existing systems aren't equipped to handle the level of detail ASC 944 requires. Consider investing in technology solutions designed for insurance accounting. These tools can automate a lot of the heavy lifting, like data collection and report generation.
What's the biggest mistake companies make when trying to comply with ASC 944?
Underestimating the complexity! It's easy to assume that short-duration contracts mean a simple implementation. However, the reality is that ASC 944 requires a deep understanding of the standard and a well-coordinated effort across different departments.
Where can I go for help with ASC 944 implementation?
Don't hesitate to reach out to experts! Data consultation companies like HubiFi specialize in helping businesses navigate complex accounting standards like ASC 944. We can provide tailored guidance, technology solutions, and ongoing support to ensure a smooth and successful implementation.
Former Root, EVP of Finance/Data at multiple FinTech startups
Jason Kyle Berwanger: An accomplished two-time entrepreneur, polyglot in finance, data & tech with 15 years of expertise. Builder, practitioner, leader—pioneering multiple ERP implementations and data solutions. Catalyst behind a 6% gross margin improvement with a sub-90-day IPO at Root insurance, powered by his vision & platform. Having held virtually every role from accountant to finance systems to finance exec, he brings a rare and noteworthy perspective in rethinking the finance tooling landscape.