ASOPs Flashcards
purpose of ASOP 41
[Actuarial Communications]
provides guidance on actuarial communication - written, electronic, or oral - issued with respect to actuarial services
(does not apply when no actuarial finding exists)
three relevant audiences for actuarial communications
- intended user - any user the actuary identifies as one who is able to rely on the actuarial findings
- other user - any recipient who is not an intended user
- principal - client or employer of the actuary
considerations for actuarial communications (4)
- form
- content
- clarity
- reasonable timing
standard of clarity for an actuarial report
sufficient for another qualified actuary to assess the reasonableness of the work
disclosures for ASOP 41 (6)
- identification of the responsible actuary
- date and subject of the actuarial documents
- disclosures in actuarial reports: intended users, scope, purpose, limitations, etc.
- assumptions or methods prescribed by law
- reliance on other sources
- deviations from ASOP guidance
purpose of ASOP 43
[P&C Unpaid Claim Estimates]
provides guidance on estimation of loss and LAE for unpaid claims, when unpaid claim estimates are communicated as actuarial findings
three possible purposes of an unpaid claim estimate
- external financial reporting
- internal management reporting
- scenario analysis
what the actuary should do if constraints create the risk that a more detailed analysis would produce a materially different result
notify the principal and communicate the constraints
factors that should be reflected in an unpaid claim estimate analysis (4)
- methods and models used
- sensitivity of assumptions
- changing conditions, including economic, regulatory, judicial, and political conditions
- uncertainty from model risk, parameter risk, and process risk
disclosures for ASOP 20 or 43 (4)
- intended purpose
- relevant dates: accounting, valuation, and review dates
- limitations that may have materially impacted results
- significant risks and uncertainties
- per ASOP 41: assumptions or methods prescribed by law; reliance on other sources; deviations from ASOP guidance
specific disclosures for ASOP 20 or 43 that may be required (2)
- if a range of estimates is provided, disclose the basis of the range
- if the estimate is an update, disclose the change in assumptions, procedures, methods, or models and reasons for the change
purpose of ASOP 36
[Statements of Actuarial Opinion on P&C Loss and LAE Reserves]
provides guidance on issuing a written statement of actuarial opinion regarding loss and LAE reserves
purpose of ASOP 20
[Discounting P&C Unpaid Claim Estimates]
* provides guidance on discounting unpaid claim estimates to present value, when unpaid claim estimates are communicated as actuarial findings
considerations for assumption of timing of future payments for discounting reserves (3)
- a range of timing estimates may be reasonable
- assumptions should be internally consistent
- understand sensitivity around assumptions
three possible approaches for selection of discount rate
- use a rate close to the risk-free rate
- portfolio approach: anticipated return on a selected asset portfolio
- rates requested by another party