Actuarial Standards Board News

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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The ASB approved an exposure draft of a revision of ASOP No. 10, now titled U.S. GAAP for Long-Duration Life, Annuity, and Health Products. The ASOP applies to actuaries when performing actuarial services related to the preparation or review of insurance company financial statements in accordance with generally accepted accounting principles (GAAP) for long-duration life, annuity, or health products. The actuary should comply with the standard except to the extent it may conflict with applicable law (statutes, regulations, and other legally binding authority) or authoritative GAAP guidance (such as Accounting Standards Codification [ASC], Staff Accounting Bulletins issued by the U.S. Securities and Exchange Commission, and other guidance issued by authoritative bodies). Notable changes made to the exposure draft include revising the title, purpose, and scope to encompass long-duration life, annuity, and health products; and clarifying the scope to include the review of GAAP financial statements. The comment deadline is June 30, 2022. Information on how to submit comments can be found in the exposure draft.

The ASB recently adopted a revision of ASOP No. 18, now titled Long-Term Care. The ASOP applies to actuaries when performing actuarial services with respect to long-term care (LTC) benefit plans sponsored by insurers or other entities. The standard also applies to actuaries designing, pricing, or determining funding of an LTC benefit plan. In addition, the standard applies to actuaries measuring or evaluating LTC liabilities within an LTC benefit plan. The standard does not apply to actuaries providing actuarial services related to LTC benefits for Medicaid-eligible recipients unless the actuarial services are for a long-range financial projection (generally more than five years) of LTC benefit expenditures and eligible recipients under the Medicaid program. The standard is effective for actuarial services performed on or after Sept. 1, 2022.