As part of its broader initiative to improve financial reporting for insurance accounting, the Financial Accounting Standards Board is seeking constituent comment and perspective on the potential bifurcation of insurance and reinsurance contracts into insurance components and financing components.FASB said that the invitation to comment aligns with the standards-setter's concerns about a potential lack of transparency in the financials of both policyholders and reinsurance companies.
The insurance financials relate to the depiction of insurance risk associated with contracts that include terms or features that limit the actual amount of risk transferred. FASB said that such contracts are frequently referred to as "finite risk contracts." However, the board said that its invitation to comment would not be restricted to finite risk contracts.
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