The ASB approved an exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 41,Actuarial Communications. The ASOP applies to actuaries when issuing actuarial communications in any form (written, electronic, or oral) within any practice area. The standard does not apply to actuaries when issuing a communication that does not include the rendering of actuarial services. Along with the standard, the actuary should also refer to the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States (U.S. Qualification Standards) and the Code of Professional Conduct as they relate to actuarial communications.
Notable changes made to the proposed revision include improving definitions in section 2 to clarify the differences among actuarial communications, actuarial reports, and actuarial documentation; adding clarity in sections 3 and 4 regarding the disclosure requirements that apply to all actuarial communications versus those that apply only to actuarial reports; and adding specific guidance regarding the actuary opining on assumptions that do not conflict with what the actuary believes is reasonable.
The comment deadline is Nov. 1, 2022. Information on how to submit comments can be found in the exposure draft.
The ASB approved an exposure draft of a proposed 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 applies 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 of an insurance company or other property/casualty risk financing system when 1) the statement of actuarial opinion is prepared to comply with the NAIC Property/Casualty Annual Statement Instructions; or 2) the statement of actuarial opinion is otherwise prescribed by applicable law (statutes, regulations, and other legally binding authority); or 3) the statement of actuarial opinion is represented by the actuary as complying with the standard. “Other reserves” include such items as retrospective reinsurance premium reserves, unearned premium reserves for property/casualty long duration contracts, unearned premium reserves for extended reporting endorsements, or other reserve items for which the actuary is providing a statement of actuarial opinion.
In addition, the ASB approved an exposure draft of a proposed revision of the scope of ASOP No. 28, Statements of Actuarial Opinion Regarding Health Insurance Assets and Liabilities. The scope of ASOP No. 28 is being revised to remove a conflict with ASOP No. 36. The current guidance excludes statements of actuarial opinion subject to ASOP No. 36 from the scope. The revision removes that exclusion and clarifies that if an actuary issues a statement of actuarial opinion that includes both health insurance assets and liabilities, and property/casualty insurance loss and loss adjustment expense reserves, both ASOP Nos. 28 and 36 may apply.
The comment deadline for both exposure drafts is Sept. 30, 2022. Information on how to submit comments can be found in the drafts.
During its June 2022 meeting, the ASB voted to discontinue development of a proposed actuarial standard of practice (ASOP) on setting assumptions and disbanded the task force with appreciation for their development efforts.
The proposed standard was initially exposed in December 2016 with the goal of supplementing the guidance contained in practice-specific standards. After three exposure drafts, the proposed ASOP was examined against other ASOPs, and the ASB noted considerable duplication with the guidance in existing ASOPs. Most notably, since the initial exposure of the proposed setting assumptions ASOP, the ASB adopted ASOP No. 56, Modeling, in 2019 as a cross-practice standard containing substantial guidance on setting assumptions within models. In addition, the ASB noted that the guidance for assumptions in the practice-specific ASOPs was often more comprehensive than the guidance in the proposed ASOP. Lastly, after reviewing the history of comment letters received on all three exposure drafts, the ASB noted that the perceived need for a separate ASOP on setting assumptions remained mixed. Therefore, after much deliberation, the ASB concluded that the proposed ASOP would not add meaningful guidance to the existing body of standards and voted to discontinue development of the ASOP.
The ASB would like to thank the Assumptions Task Force, the ASB General Committee, and all the commentators who contributed to the proposed ASOP.
The ASB approved an exposure draft of a revision of Actuarial Standard of Practice (ASOP) No. 20, now titled Discounting of Property/Casualty Claim Estimates. The ASOP applies to actuaries when performing actuarial services that involve the discounting of claim estimates for property/casualty coverages to a present value.
Notable changes made to the exposure draft include expanding the scope of the standard to include the discounting of future claim estimates for prospective risk transfer or risk retention, as addressed by ASOP No. 53, Estimating Future Costs for Prospective Property/Casualty Risk Transfer and Risk Retention; adding definitions for such terms as “claim estimate,” “insurance risk,” and “coverage;” and adding guidance on discount rate selection and appropriateness.
The comment deadline is Sept. 30, 2022. Information on how to submit comments can be found in the exposure draft.
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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.