The ASB adopted ASOP No. 56, Modeling. The ASOP provides guidance to actuaries when performing actuarial services with respect to designing, developing, selecting, modifying, using, reviewing, or evaluating models. Notable changes made to the fourth exposure draft include deleting the section on margins because it did not provide sufficiently clear guidance. In addition, “hold-out data” in predictive modeling was defined and added to the list of items that may be included in the model output validation. The ASOP, which underwent four exposure periods and received over 100 combined comment letters, was developed in response to the increases in the number and importance of modeling applications in actuarial science, with the results of actuarial models sometimes being reflected in financial statements. ASOP No. 56 is effective for work commenced on or after Oct. 1, 2020, and can be viewed here.
ASOP No. 11, which was first adopted in 1989, superseded Recommendation No. 4 and Interpretation No. 4-A of the Financial Reporting Recommendations and Interpretations of the American Academy of Actuaries that covered certain aspects of generally accepted accounting principles financial reporting on reinsurance ceded by life and health insurance companies. The ASOP was revised in 2005 to reflect changes in reinsurance practice and related accounting guidance. Since 2005, significant new guidelines and requirements for life insurance policies and annuity contracts had emerged. The proposed revision of ASOP No. 11 would apply to actuaries when performing actuarial services in connection with preparing, determining, analyzing, or reviewing financial reports for internal or external use that reflect reinsurance programs on life insurance, annuities, or health benefit plans. The comment deadline for the ASOP No. 11 exposure draft is March 31, 2020.
The first exposure draft of ASOP No. 32 was issued in October 2018. Seven comment letters were received and considered in making changes that are reflected in the second exposure draft. Notable changes to the second exposure draft include clarifying the scope to cover situations when a program was not specifically included or excluded from the scope, and expanding the scope to apply to actuaries when performing actuarial services in connection with an actuarial analysis of a Social Insurance Program when the actuary’s principal is not a government agency with responsibility for the valuation of a Social Insurance Program. The comment deadline for the ASOP No. 32 exposure draft is Feb. 14, 2020.
Both drafts can be viewed under the “Drafts” tab in “Exposure Drafts Open for Comment.” Information on how to submit comments can be found in the drafts.
The ASB has issued a Request for Input concerning the development of an actuarial standard of practice (ASOP) that would address the actuarial aspects of property/casualty rate filings submitted to state insurance departments. The proposed standard would provide guidance to actuaries regarding the actuarial aspects of a rate filing for the filing actuary, the regulatory actuary, and the reviewing actuary. Therefore, the ASB is interested in the views of actuaries, other parties involved in the determination of rates and the preparation and/or review of rate filings submitted to state insurance departments, and any others who have opinions on the matter of the actuarial aspects of the insurance rate filing process.
The Request for Input document can be found here. Deadline for receipt of input is February 28, 2020.
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About The ASB
The Actuarial Standards Board (ASB) sets standards for appropriate actuarial practice in the United States through the development and promulgation of Actuarial Standards of Practice (ASOPs). These ASOPs describe the procedures an actuary should follow when performing actuarial services and identify what the actuary should disclose when communicating the results of those services.