COPLFR (excl 7-8) Flashcards
What should the opening paragraph state?
Actuary’s Name and Title
Who made the appointment (BOD)
Affirmation of qualifications
Relationship w/ the company (Employee or consultant?)
Date of appointment
statement that the qualification documentation was provided to the board
Appointment of AA
Initial Appointment:
By BOD before 12/31 year opining on (notify dom com within 5 days with )
- Name and title
- manner of appointment
- person meets requirements of a qualified actuary (or was approved by dom com, presented to BOD)
after no further notice is needed unless change!
3 types of “Board of Directors”
can include designated BOD, its equivalent, or an appropriate committee directly reporting to the BOD
Identification Illustrative Language
I, Name of AA [designations], am associated with ABC insurance. I was appointed by the BOD of ABC insurance on xx/xx/xxxx to render this opinion. I meet the def of a QA per the NAIC annual statement instructions - P&C, AO. I have provided my qualification documentation to the BOD directly.
Def of Qualified Actuary
meets basic education, experience, CE reqs of SQS for SAO, NAIC P&C AS as set forth in QS for actuaries issuing SAO in the U.S, promulgated by the AAA and…..
obtained and maintains an AAD
and….
is member of professional act organization that.
-adheres to code of conduct of Academy
-reqs adherence to U.S QS
-ABCD participation while actuaries are practicing in the US
exception to qualified actuary
-evaluated by Academy’s CPC and determined to be a QA for some LOBs and business activities (provides exemption for all QA reqs except for member of org that does the 3 things)
- approved by dom com
What must company do if AA is a QA by the exception?
company must attach, each year, approval letter and reference in the ID paragraph
U.S QS
Basic ed: ACAS/FCAS/EA/MAAA
exp: 3 yrs responsible
U.S specific knowledge: law and practices
subject area knowl:
30 hours relevant CE
- 6 + hours organized activities
- 3 + professionalism
- 1 +bias
- <=3 general business
+
one of…
fellowship (SOA/CAS) AND completed relevant education
min of 1yr responsible exp under review of QA
OR
min 3 years responsible exp under review of QA
U.S SQS
Basic ed: exams from academy/soa/cas on
policy forms & coverages, UW, marketing, ratemaking, insurance accounting, reinsurance OR
obtained signed statement from QA familiar with your background
exp: 3 yrs responsible
CE: 15 hours +, 6+ organized activities
NAIC standards for QA
US SQS
AAD
member of org that does the 3 things
state reqs vary
What should the qualification documentation contain?
-brief bio of actuary
-description of how def of QA is met for that year (CE)
-describe relevant experience to SAO
At what level should the review of the qualification documentation take place?
level within holding company structure that is responsible for overseeing insurance operations
-can be a parent board if a subsidiary (note in meeting minutes the name of the lead entity that reviewed the documentation or by attaching a copy of the parent boards meeting minutes reflecting their review)
Is the qualification documentation sent to the commissioner?
It is considered workpapers and available for inspection upon regulator request or during a financial exam
same confidentiality as the AR
Where can qualification documentation be reviewed if a single AR is used for multiple companies (in intercompany pooling for example)?
may be reviewed at level other than statutory entity defined as “responsible for overseeing insurance operations”
What constitutes an AAD?
designation meeting or exceeding NAIC P&C educational standards for AAs
examples:
FCAS & 6U
ACAS & 6U & 7
FSA (GI track)
exceptions can be made for 6U for example, can override with experience
How should actuaries (subject to US QS) document CE?
maintain timely records as evidence, should be for 6 + years
include
dates
hours
brief desc
whether it applies to a SQS and which one
is it an organized activity?
Procedure for changing an AA
Within five days of the action, the company must advise the relevant domiciliary insurance department in writing of the change.
Within 10 days of the notification, the company must write to the domiciliary Commissioner stating whether in the 24 months preceding the change (any disagreements on important things, list them and state whether they were resolved, nature of resolution(s))
The letter must be accompanied by a response from the former Appointed Actuary addressed to the company “stating whether the Appointed Actuary agrees with the statements contained in the Insurer’s letter and, if not, stating the reasons for which he or she does not agree
What reserve items may be included in the scope?
- Loss and LAE reserves;
- Retroactive reinsurance assumed reserves;
- Unearned premium reserves for P&C long-duration contracts;
- Unearned premium reserves for extended reporting endorsements (>= 1st schedule P interrogatory amt)
- Other reserve items for which the Appointed Actuary is providing an opinion
Language for examining actuarial methods and assumptions
I have examined the actuarial assumptions and methods used in determining the reserves listed in Exhibit A, as shown in the Annual Statement of the Company as prepared for filing with state regulatory officials, as of December 31, 2022.
Examples of “stated basis of representation” for reserve items in scope
-discounted for TVM?; items discounted
-explicit risk margin?
-gross or net of specified recoverables?
-is potential for uncollectible recoverables considered?
-types of LAE included
-is it only for portion of reserves in Exhibit A?
-misc
What must a 0% participant of an intercompany pooling arrangement do?
-speak on risks/uncertainties relevant to the lead entity
-A,B include their data
-attach A,B of lead entity
What must be disclosed for intercompany pooling?
-lead entity, description of the pool
-pooling %s, state of domicile, names of those involved
Do the requirements of intercompany pooling apply to 100% qs agreements?
No, for example dont mention this or attach any other companies SAO exhibits (also goes for AOS)
Review date def
“the date (subsequent to the valuation date) through which material information known to the actuary is included in forming the reserve opinion.