Page 5 Understanding Costs and Benefits as any changes to those methodologies) „„ „„ „„ Quantitative information about claim frequency (unless it is impracticable to do so) accompanied by a qualitative description of methodologies used for determining claim frequency information (as well as any changes to these methodologies) for each accident year of incurred claims development information presented Average annual percentage payout of incurred claims by age (that is, history of claims duration) for all claims except health insurance claims Rollforward of the liability for unpaid claims and claim adjustment expenses for annual and interim periods These disclosures will provide a more transparent view of management’s significant estimates by: „„ „„ Including information for the entire company, not only U.S. legal entities. Providing users with consistent and comparable information by year so that they can analyze an insurance company’s ability to underwrite and anticipate costs associated with claims. „„ „„ Providing disclosures of incurred and paid claims development information by accident year that are consistent with management’s analysis of information regarding the liability for unpaid claims and claim adjustment expenses. Enabling users to calculate average severity of reported claims based on the claim frequency information and the claims development information. As a whole, the amendments in the ASU will result in more meaningful financial reporting for users of the financial statements by providing financial information that better explains the financial position and performance of the reporting organization and a better basis for assessing the prospects for the nature, amount, and timing of future cash flows. © Copyright 2015 by Financial Accounting Foundation, Norwalk, CT. Reproduction of these materials, in whole or part, shall only be as permitted by Financial Accounting Foundation. This Copyright Notice must be prominently displayed on any such reproduction. The views expressed in this document do not necessarily reflect the views of the FASB. Official positions of the FASB are arrived at only after extensive due process and deliberation. Conclusion The Board’s assessment of the costs and benefits of issuing the ASU is unavoidably more qualitative than quantitative because there is no identified method to objectively quantify all of the costs and benefits of implementing new guidance. Overall, the Board concluded that the expected benefits of the amendments in the ASU justify the perceived costs. More information on the ASU, including a press release and a FASB In Focus, can be found on the FASB website. More information on how the FASB conducts its cost-benefit analysis can be found here. For a detailed explanation of the FASB’s consideration of costs and benefits refer to the basis for conclusions in ASU 2015-09. 1 401 Merritt 7, PO Box 5116 Norwalk, Connecticut 06856-5116 T: 203.847.0700 | F: 203.849.9714 .