Actuarial Standards Board News

The Actuarial Standards Board (ASB) of the American Academy of Actuaries recently adopted 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 nonguaranteed elements (NGEs) for life insurance and annuity policies written on individual policy forms where NGEs may vary at the discretion of the insurer, except as noted in the ASOP.

The ASB also adopted a revision of ASOP No. 22, now titled Statements of Actuarial Opinion Based on Asset Adequacy Analysis for Life Insurance, Annuity, or Health Insurance Reserves and Other Liabilities. The ASOP applies to actuaries when performing actuarial services with respect to providing a statement of actuarial opinion based on asset adequacy analysis of life insurance, annuity, or health insurance reserves and other liabilities when the statement of actuarial opinion is prepared to comply with applicable law based on the model Standard Valuation Law and VM-30 of the NAIC Valuation Manual; or when the statement of actuarial opinion is prepared for an insurance company to comply with other applicable law.

Lastly, the ASB adopted a revision of ASOP No. 3, now titled Continuing Care Retirement Communities and At Home Programs. The ASOP applies to actuaries when performing actuarial services, including giving advice, in connection with continuing care retirement communities (including nonprofit and for-profit entities) or At Home Programs that are not regulated as insurance entities. These actuarial services may be performed for owners, operators, financing entities, or current or prospective contractual residents or members, as well as for other professionals or regulatory bodies.

The effective date for all three revised ASOPs, which can be viewed here, is June 1, 2022.

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The ASB recently adopted a final revision of ASOP No. 38, now titled Catastrophe Modeling (for All Practice Areas). The standard provides guidance to actuaries when performing actuarial services with respect to selecting, using, reviewing, or evaluating catastrophe models. The standard applies to actuaries in any practice area when performing actuarial services with respect to selecting, using, reviewing, or evaluating catastrophe models to assess risk, including but not limited to models of hurricanes, earthquakes, severe convective storms, terrorist acts, and pandemics. The standard also applies to the selection, use, review, or evaluation of catastrophe models, whether or not they are proprietary in nature. The ASOP was revised to be consistent with ASOP No. 56, Modeling, and other recent ASOPs. The standard is effective for work performed on or after Dec. 1, 2021.

The ASB recently approved a third exposure draft of a proposed revision of ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions. The standard provides guidance to actuaries when performing actuarial services with respect to measuring obligations under a defined benefit pension plan and determining periodic costs or actuarially determined contributions for such plans. The standard addresses broader measurement issues, including cost allocation procedures and contribution allocation procedures. The standard also provides guidance for coordinating and integrating all of the elements of an actuarial valuation of a pension plan. The comment deadline for the third exposure draft is Oct. 15, 2021. Information on how to submit comments can be found in the exposure draft.

The ASB recently adopted a final revision of Actuarial Standard of Practice (ASOP) No. 28, now titled Statements of Actuarial Opinion Regarding Health Insurance Assets and Liabilities. The ASOP provides guidance to actuaries when performing actuarial services with respect to issuing or reviewing a statement of actuarial opinion regarding health insurance assets and liabilities. The standard is effective for work performed involving statements of actuarial opinion regarding health insurance assets and liabilities issued on or after July 1, 2022.

The ASB also approved an exposure draft of a proposed revision of ASOP No. 24, Compliance with the NAIC Life Insurance Illustrations Model Regulation. The ASOP provides guidance to actuaries when performing actuarial services with respect to applicable law (statutes, regulations, and other legally binding authority) based on the NAIC Life Insurance Illustrations Model Regulation and related NAIC actuarial guidelines or when performing actuarial services with respect to illustrations represented to be in accordance with the Model and related NAIC actuarial guidelines. The comment deadline for the exposure draft is Sept. 30, 2021. Information on how to submit comments can be found in the exposure draft.