Actuarial Standards Board News

The Actuarial Standards Board of the American Academy of Actuaries recently adopted a revision of ASOP No. 24, now titled NAIC Life Insurance Illustrations Model Regulation.

The ASOP, which underwent three exposure periods and received 10 comment letters, provides guidance to actuaries when performing actuarial services in support of a certification or representation that life insurance illustrated scales are in conformity with the National Association of Insurance Commissioners (NAIC) Life Insurance Illustrations Model Regulation (Model) or applicable actuarial guidelines (applicable AGs). 

Notable changes include introducing the new term “applicable actuarial guideline (applicable AG)”; adding guidance on consistency of experience factors; and revising and updating guidance to include a reference to the scope of and any limitations imposed by an applicable AG. The effective date for this revision of ASOP No. 24 is Dec. 1, 2024.

The Actuarial Standards Board of the American Academy of Actuaries approved an exposure draft of a proposed new actuarial standard of practice (ASOP) titled Pricing Reinsurance or Similar Risk Transfer Transactions Involving Life Insurance, Annuities, or Long-Duration Health Benefit Plans. The proposed standard applies to actuaries when performing actuarial services with respect to the pricing of reinsurance transactions or similar risk transfer transactions from the assuming entity perspective involving life insurance, annuities, or long-duration health benefit plans. 

The ASB recognized that pricing of reinsurance assumed for life, annuities, and health benefit plans as well as management of nonguaranteed reinsurance elements are significant areas of practice that lacked guidance, and thus appointed a task force in April 2021 to develop a new ASOP on pricing reinsurance involving life insurance, annuities, and long-duration health benefit plans from an assuming company perspective. The ASB appreciates comments and suggestions on all areas of the proposed standard as well as feedback on questions, including:

1. Does the ASOP scope appropriately cover reinsurance pricing involving life and annuity products?
2. Does the ASOP provide appropriate guidance on pricing-related activities (such as administration and treaties) and pricing activities subsequent to initial pricing (such as monitoring and nonguaranteed element management)?

The comment deadline is November 1, 2024. Information on how to submit comments can be found in the draft.

The Actuarial Standards Board of the American Academy of Actuaries approved an exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 30, now titled Profit Margins and Contingency Provisions in Property/Casualty Risk Transfer and Risk Retention. The ASOP applies to actuaries when performing actuarial services with respect to developing or reviewing profit margins and contingency provisions that are included in future cost estimates for all forms of prospective property/casualty risk transfer and risk retention. 

Notable changes from the existing standard include broadening the scope in section 1.2 from estimating the cost of capital and evaluating the underwriting profit and contingency provisions to developing overall profit margins and contingency provisions; adding definitions of profit margin, risk margin, risk retention, and risk transfer; clarifying the difference between a profit margin and a contingency provision; and clarifying guidance regarding taking the cost of capital into account when developing the profit margin. 

The comment deadline is November 1, 2024. Information on how to submit comments can be found in the draft.

Read the latest news from the ASB Boxscore.

The Actuarial Standards Board of the American Academy of Actuaries adopted a revision of Actuarial Standard of Practice (ASOP) No. 36, now titled Statements of Actuarial Opinion Regarding Property/Casualty Loss, Loss Adjustment Expense, or Other Reserves. The ASOP provides guidance to actuaries when performing actuarial services with respect to a written statement of actuarial opinion regarding property/casualty loss, loss adjustment expense, or other reserves. The ASOP underwent two exposure periods and received 13 comment letters. Notable changes from the existing ASOP No. 36 include expanding the purpose and scope beyond “issuing” and “providing” to “performing actuarial services with respect to a written statement of actuarial opinion regarding property/casualty loss, loss adjustment expense, or other reserves”; adding definitions for “counterparty” and “recoverable”; and revising guidance on the stated basis of the reserve to include characteristics of other reserves being opined upon.

Successively, the scope of the 2022 adopted revision of ASOP No. 28, Statements of Actuarial Opinion Regarding Health Insurance Assets and Liabilities, was further revised to clarify that ASOP No. 36 may apply to the standard in addition to ASOP No. 28 and ASOP No. 22, Statements of Actuarial Opinion Based on Asset Adequacy Analysis for Life Insurance, Annuity, or Health Insurance Reserves and Other Liabilities.

The effective date for ASOP Nos. 28 and 36 is Oct. 1, 2024.