ASOP 41: Actuarial Communications

Question 1

Section 2 - Definitions

Answer 1

• Actuarial Communication – Written, electronic, or oral by actuary with respect to actuarial services
• Actuarial Document – actuarial communication in any recorded form (paper, email, spreadsheets, presentations, recordings, websites, court transcripts)
• Actuarial Findings – Results of actuarial services (advice, recommendations, opinions, or commentary on
  another actuary’s work)
• Actuarial Report – actuarial documents available to an intended user that the actuary determines relevant
  to specific actuarial findings

Question 2

Section 3 - Analysis of Issues and Recommended Practices

1. Requirements for Actuarial Communication
2. Actuarial Report
3. Specific Circumstances
4. Disclosures within an Actuarial Report
5. Explanation of Material Differences
6. Oral Communication
7. Responsibilities to Other Users

Answer 2

1. Requirements for Actuarial Communications
a. Completion of actuarial assignment requires communications between the actuary and intended users regarding scope of work: methods, assumptions, data, and other information: and actuarial communications of the actuarial findings

b. Form and content of communication appropriate to particular circumstances and intended users

c. Clarity: communication is clear and uses language appropriate to circumstances and intended users

d. Timing of communication: issue communication within reasonable period following completion of assignment unless other arrangements satisfactory to the parties have been made o Identification of responsible actuary

2. Actuarial report
a. Complete an actuarial report if intend for actuarial findings to be relied upon by any intended user

b. If report for a specific user comprises multiple documents, communicate which documents comprise the report

c. Report should state actuarial findings, methods, procedures, assumptions, and data used

d. Sufficient clarity that another actuary qualified in same practice area could appraise reasonableness

3. Specific circumstances: if circumstances are such that certain content is not necessary, be prepared to justify limiting the content of the report

4. Disclosures within an actuarial report
a. Review required disclosure items below (see “communications and disclosures”) and other relevant ASOPs

b. Uncertainty or risk: consider what uncertainty or risk in results should be reported

c. Conflict of interest: an actuary not financially, organizationally, or otherwise independent concerning the subject of an actuarial communication should disclose it

d. Reliance on Other Sources
▪ Actuary who makes communication assumes responsibility except when disclaims responsibility by stating reliance on other sources
▪ Reliance means using sources without assuming responsibility for them
▪ Define the extent of reliance, example stating whether or not checks of reasonableness applied
▪ May rely on other sources except where limited by standards of practice law or regulation

e. Responsibility for assumptions and methods: identify the party responsible for each material method and assumption
▪ If assumption or method is specified by applicable law, include disclosure identified below (see “certain assumptions or methods prescribed by law”)
▪ If assumption or method is selected by another party, the actuary has 3 choices
* 1. If does not conflict with actuary’s professional judgment, no disclosure obligation
* 2. If significantly conflicts with actuary’s professional judgment, must disclose that fact an additional information below (see “responsibility for assumptions and methods”)
* 3. If actuary unable to judge reasonableness of assumption or method, disclose that fact

f. Information date of report: communicate the date(s) through which data or information has been considered in developing the report

g. Subsequent events: disclose any event that meets the following:
▪ 1. It becomes known to the actuary after the latest information date
▪ 2. Becomes known to the actuary before the report is issued
▪ 3. May have a material effect on the actuarial findings
▪ 4. It is impractical to revise the report before it is issued

5. Explanation of material differences
a. If a later actuarial communication by the same actuary includes materially different results of opinions, then state the earlier results are no longer valid and why they changed

6. Oral communications
a. Include each disclosure (see above) if appropriate

b. Where oral communication may be passed on to other parties, consider following up with an actuarial document

7. Responsibilities to other users
a. Actuarial communication may influence person not part of intended audience
▪ Actuary should recognize risks of misquotation, misinterpretation, or misuse. Take reasonable steps to ensure communication is clear
▪ Actuary may include language to limit its distribution

b. No obligation for the actuary to communicate with any person other than intended audience

8. Retention of other materials
a. ASOP does not require actuary to disclose supporting materials retained by actuary but not included in the report

Question 3

Section 4 - Communications and Disclosures

Answer 3

1. Disclosures in any actuarial communication
a. Identification of responsible actuary

b. Identification of actuarial documents: include date and subject of the document

c. Disclosures in actuarial reports
- The intended users of the report
- Scope and intended purpose of the assignment
- Acknowledgement of qualification as specified in the Qualification Standards
- Cautions about risk and uncertainty
- Any limitations on the use of applicability of the actuarial findings
- Any conflict of interest
- Any information the actuary relied upon for which the actuary does not assume responsibility (see “reliance on other sources for data and other information”)
- The information date
- Subsequent event(s)
- The documents comprising the actuarial report

2. Assumptions of methods prescribed by law
a. When this applies, the actuary should disclose:
- The applicable law
- Assumptions or methods prescribed
- That the report was prepared in accordance with the applicable law

3. Responsibility for assumptions and methods: where actuary states reliance on other sources and disclaims responsibility, disclose the the following
a. The assumption or method that was set by another party

b. Party who set the assumption or method

c. Reason that this party set the assumption or method, and

d. Either,
- The assumption or method conflicts with the actuary’s professional judgment
- Actuary was not qualified to judge reasonableness or unable to judge without substantial additional work

4. Deviation from ASOP
a. State the nature, rationale and effect of such deviation