The Actuarial Standards Board (ASB) of the American Academy of Actuaries adopted a revision of Actuarial Standard of Practice (ASOP) No. 29, now titled Expense Provisions for Prospective Property/Casualty Risk Transfer and Risk Retention. The standard applies to actuaries when performing actuarial services with respect to developing or reviewing expense provisions for prospective property/casualty risk transfer or risk retention. This includes expense provisions developed or reviewed for insurance, reinsurance, self-insurance, loss portfolio transfers, or other mechanisms for prospective property/casualty risk transfer or risk retention. If the actuary’s actuarial services involve reviewing expense provisions developed by another party, the actuary should use the guidance in the ASOP to the extent practicable within the scope of the actuary’s assignment.
The revision, which was exposed for comment twice, received 13 comment letters. Notable changes made to the standard include:
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The expansion of scope and new guidance on loss adjustment expense categories, intended measure, the timing of residual market expenses, the timing of statutory assessments, and documentation;
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Definitions for “coverage,” “expense provision,” “risk retention,” and “risk transfer” were added; and
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The list of required disclosures was expanded.
This standard is effective for work performed on or after July 1, 2024.
