The ASB recently approved an exposure draft of a revision of ASOP No. 38, now titled Catastrophe Modeling (for All Practice Areas). The ASOP provides guidance to actuaries when performing actuarial services with respect to selecting, using, reviewing, or evaluating catastrophe models. At the direction of the ASB, the standard was developed to apply to all practice areas and all forms of catastrophe models, including natural catastrophes such as hurricanes, earthquakes, and severe convective storms, and other catastrophes such as terrorist acts and pandemics. Changes also were made to ASOP No. 38 to be consistent with ASOP No. 56, Modeling, and other recent ASOPs. In addition, the scope of the ASOP was expanded to include the activities “selecting, reviewing, and evaluating” models in addition to the existing activity of “using” a model when performing actuarial services. The comment deadline for the third exposure draft is Jan. 15, 2021.
The ASB also approved a third exposure draft of a proposed ASOP titled Setting Assumptions. The ASOP provides guidance to actuaries when performing actuarial services that involve setting assumptions, giving advice on setting assumptions, or assessing the reasonableness of assumptions set by others. Twenty-five comment letters were received on the second exposure draft and considered in making changes that are reflected in the third exposure draft. Notable changes reflected in the third exposure draft include significant revisions made to coordinate with ASOP No. 56, expanding the purpose to make it more consistent with the scope, and changing guidance on assumption margins to acknowledge that margins can be either explicit or implicit. The comment deadline for the third exposure draft is April 15, 2021.
Information on how to submit comments using the new comment template can be found in both exposure drafts.
ASOP No. 27 provides guidance to actuaries when performing actuarial services that include selecting (including giving advice on selecting) economic assumptions—primarily investment return, discount rate, post-retirement benefit increases, inflation, and compensation increases—for measuring obligations under defined benefit pension plans.
ASOP No. 35 provides guidance to actuaries when performing actuarial services that include selecting (including giving advice on selecting) demographic and other noneconomic assumptions for measuring obligations under defined benefit pension plans.
ASOP Nos. 27 and 35 are effective for actuarial reports issued on or after August 1, 2021 and when the measurement date in the actuarial report is on or after Aug. 1, 2021.
The ASB recently approved a second exposure draft of a revision of ASOP No. 2, now titled Nonguaranteed Elements for Life Insurance and Annuity Products. The ASOP applies to actuaries when performing actuarial services with respect to the determination and, if applicable, illustration of NGEs for all life insurance and annuity policies written on individual policy forms where NGEs may vary at the discretion of the insurer except where noted in the ASOP. This would include determination of NGEs on in-force policies that were issued before the ASOP took effect. The comment deadline for the second exposure draft is Nov. 13, 2020. Information on how to submit comments can be found in the draft.
The ASB recently adopted a revision of ASOP No. 32, Social Insurance. The standard applies to actuaries when performing actuarial services in connection with an actuarial analysis of a Social Insurance Program whether the actuary’s principal is or is not a government agency with responsibility for the valuation of a Social Insurance Program. The standard also applies to actuaries with oversight responsibility for the actuarial services for Social Insurance Programs when serving as an auditor, reviewer, a member of an actuarial advisory committee, or a member of a technical panel. The ASOP is effective for work commenced on or after Sept. 1, 2021 and can be viewed here.
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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.