The Actuarial Standards Board (ASB) of the American Academy of Actuaries approved an exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 40, now titled Compliance with the NAIC Valuation of Life Insurance Policies Model Regulation with Respect to X Factors.
The ASOP provides guidance to actuaries when performing actuarial services with respect to adjusting deficiency reserve mortality rates using X factors pursuant to applicable law (statutes, regulations, and other legally binding authority), including applicable law based on the National Association of Insurance Commissioners (NAIC) Valuation of Life Insurance Policies Model Regulation (Model).
Notable changes made in the exposure draft include making the ASOP applicable to all actuaries performing actuarial services related to compliance with the Model, rather than only to the appointed actuary; eliminating the descriptions of Model requirements; adding guidance related to the creation of X factor classes based on risk characteristics; and adding guidance for assessing mortality expectations compared to actual experience.
The comment deadline is Sept. 15, 2023. Information on how to submit comments can be found in the exposure draft.