2.1 COPLFR AOS Flashcards
Is the AOS confidential?
The AOS contains significant proprietary information. It is expected that the AOS be held confidential; it is not intended for public inspection. The AOS should not be filed with the NAIC and should be kept separate from any copy of the Statement of Actuarial Opinion (Actuarial Opinion) in order to maintain confidentiality of the AOS. The AOS can contain a statement that refers to the Actuarial Opinion and the date of that opinion.
Who should the AOS be filed with?
- This attached document should not be filed with the NAIC;
- This attached document should be filed with the domiciliary state’s regulator; and
- This attached document should not be filed with any other state’s regulator, unless specifically requested.
When should the AOS be filed?
For all Companies that are required by their domiciliary state to submit a confidential document entitled Actuarial Opinion Summary (AOS), such document shall be filed with the domiciliary state by March 15 (or by a later date otherwise specified by the domiciliary state). This AOS shall be submitted to a non-domiciliary state within fifteen days of request, but no earlier than March 15, provided that the requesting state can demonstrate, through the existence of law or some similar means, that it is able to preserve the confidentiality of the document.
I have completed the Statement of Actuarial Opinion and Actuarial Opinion Summary at the same time and provided them to the Company. Does the Company file them with its domiciliary state insurance department together?
No, the SAO and AOS are separate documents. The AOS is not included with the Company’s Annual Statement and other documents that are filed with the NAIC due to its confidential nature. The AOWG Regulatory Guidance advises that, in order to avoid confusion, the Appointed Actuary should provide the AOS to company personnel separately from the SAO.
NAIC AOS Instructions state “the net and gross reserve values reported by the Appointed Actuary in the AOS should reconcile to the corresponding values reported in the Insurer’s Annual Statement, the Appointed Actuary’s Actuarial Opinion, and the Actuarial Report. If not, the Appointed Actuary shall provide an explanation of the difference.
NAIC SAO Instructions indicate that the Actuarial Report should include detailed descriptions and calculations that support the point estimate and/or range of estimates.
The Appointed Actuary may want to consider potential responses in the AOS section E for consistency with commentary in the SAO on IRIS test exceptional values.
Sample signature line for AOS
*Signature of Appointed Actuary
*Printed name of Appointed Actuary *Employer’s name
*Address of Appointed Actuary *Telephone number of Appointed Actuary *Email address of Appointed Actuary *Date AOS was rendered
AOS for pooled companies
The AOS for a pooled Company … shall include a statement that the Company is a xx% pool participant. For a non-0% Company, the information provided for paragraph 5 should be numbers after the Company’s share of the pool has been applied; specifically, the point or range comparison should be for each statutory Company and should not be for the pool in total. For any 0% pool participant, the information provided for paragraph 5 should be that of the lead company.
If you have to amend the SAO, do you also need to amend the AOS?
Yes
The AOS shall be considered to be in error if the AOS would have not been issued or would have been materially altered had the correct data or other information been used. The AOS shall not be considered to be in error if it would have been materially altered or not issued solely because of data or information concerning events subsequent to the balance sheet date or because actual results differ from those projected.
When an AOS is in error, as defined above, AOWG Regulatory Guidance indicates the revised Summary should:
- be submitted to the regulator
- clearly state that it is an amended document
- contain or accompany an explanation for the revision and
- include the date of the revision.
When AOS is considered to be in error:
The Insurer required to furnish an AOS shall require its Appointed Actuary to notify its Board of Directors in writing within five (5) business days after any determination by the Appointed Actuary that the AOS submitted to the domiciliary commissioner was in error as a result of reliance on data or other information (other than assumptions) that, as of the balance sheet date, was factually incorrect…Notification shall be required when discovery is made between the issuance of the AOS and Dec. 31 of that year. Notification should include a summary of such findings.
If the Appointed Actuary learns that the data or other information relied upon was factually incorrect, but cannot immediately determine what, if any, changes are needed in the AOS, the Appointed Actuary and the Company should quickly undertake procedures necessary for the Appointed Actuary to make such determination. If the Insurer does not provide the necessary data corrections and other support (including financial support) within ten (10) business days, the Appointed Actuary should proceed with the notification to the Board of Directors and the domiciliary commissioner.
An Insurer who is notified pursuant to the preceding paragraphs shall forward a copy of the amended AOS to the domiciliary commissioner within five (5) business days of receipt of such and shall provide the Appointed Actuary making the notification with a copy of the letter and amended AOS submitted to the domiciliary commissioner. If the Appointed Actuary fails to receive such copy within the five (5) business day period referred to in the previous sentence, the Appointed Actuary shall notify the domiciliary commissioner within the next five (5) business days that an amended AOS has been finalized.
