The ASB recently approved an exposure draft of a revision to ASOP No. 5, Incurred Health and Disability Claims, and a second exposure draft of proposed ASOP Property/Casualty Ratemaking.
The proposed revision to ASOP No. 5 reflects a number of changes to other standards that have been made since the 2000 revision, and includes key changes such as explicitly addressing certain considerations in estimating and analyzing incurred claims, including behavior of claimants, claim seasonality, credibility, payments and recoveries under government programs, and the purpose and intended use of the unpaid claim estimate.
The proposed new ASOP Property/Casualty Ratemaking addresses items in the Considerations section of the Statement of Principles Regarding Property/Casualty Ratemaking, as well as ratemaking items not currently addressed in existing ASOPs. Changes made in response to comments received on the September 2014 first exposure draft include revisions to the scope of the ASOP to clarify the practice areas for which it is applicable and the actuarial activities to which it is applicable; and provides guidance regarding the estimating of future costs in total as well as by underlying levels that comprise the estimate of future cost.
The comment deadline for both exposure drafts is April 30, 2016 and can be viewed under the “Drafts” tab in “Current Exposure Drafts.”
The ASB recently approved an exposure draft of a revision of ASOP No. 23, Data Quality. The ASOP was revised in 2004 and 2011 to reflect current, generally accepted practice with respect to data quality and to reflect new deviation language, respectively. In 2014, the ASB decided further review was needed to reflect changes in practice, which resulted in the drafting of the proposed revision. Proposed key changes in the revision include clarifying that the standard also applies to actuaries preparing data for other actuaries to use in an actuarial work product, requiring the actuary to disclose in summary form any unresolved questionable data uncovered on review and any steps taken to improve the data, and requiring the actuary to disclose why a review was not performed, if the actuary did not review the data. The comment deadline for the exposure draft is February 29, 2016 and can be viewed under the “Drafts” tab in “Current Exposure Drafts.”
The ASB recently adopted its 50th ASOP, Determining Minimum Value and Actuarial Value under the Affordable Care Act. Although a practice note exists that provides information on the subject of determining minimum value and actuarial value under the Affordable Care Act (ACA), no guidance for actuaries on the subject existed other than the regulation , which prompted the ASB to request that its Health Committee explore a potential ASOP to provide guidance to actuaries performing these tasks. As a result, ASOP No. 50 was adopted as a standard that applies to actuaries performing professional services with respect to calculating actuarial values and testing minimum value requirements in accordance with the ACA and related regulations, specifically for purposes of (1) categorizing individual and small group health insurance plans into metal levels; (2) testing whether employer-sponsored health insurance plans meet the federal minimum value requirements; or (3) making any required certifications. The standard, which will be effective for any actuarial work product covered by its scope issued on or after Jan. 31, 2016, can be viewed in the "Current Standards (ASOPs)" section under the tab "Standards of Practice."
The ASB recently approved an exposure draft of a revision of ASOP No. 21, Responding to or Assisting Auditors or Examiners in Connection with Financial Audits, Financial Reviews, and Financial Examinations. As financial audits, reviews, and examinations have evolved significantly in the last ten years, the ASB decided that another revision of ASOP No. 21 was necessary. The current version of ASOP No. 21 does not address the actuary’s responsibility with respect to process and controls in the Sarbanes-Oxley environment, and was adopted before the National Association of Insurance Commissioners promulgated the Model Audit Rule. Furthermore, audits and examinations are increasingly conducted on a risk-focused basis and this contributed to the need for a revision of ASOP No. 21. The comment deadline for the exposure draft is December 31, 2015 and can be viewed under the “Drafts” tab in “Current Exposure Drafts.”
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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.