General Interrogatories (ch.11)

Question 1

What are the 2 categories of interrogatories?

Answer 1

Common => applicable to all insurers
Specific => to the industry (e.g. P&C Interrogatories)

Question 2

What is the purpose of the common interrogatories?

Answer 2

give an understanding of COB
controls
operations
business practices

Question 3

What does the general section (common interrogatories) ask questions about?

Answer 3

holding company relationships
merger activity
suspension of licenses
foreign controls
exemptions from regulations
latest financial exams from regulator(s)

Question 4

What does the BOD (common interrogatories) section focus on?

Answer 4

BOD role in overseeng operations

Question 4

What interrogatories are of particular importance to the P&C actuary?

Answer 4

knowledge of the auditor, appointed actuary, latest financial exam(s)

Question 5

What does the Financial (common interrogatories) section focus on?

Answer 5

accounting basis, assumed SAP
purpose mainly is to understand if there are financial obligations not reported elsewhere

Question 6

What does the Investment (common interrogatories) section focus on?

Answer 6

level of control the company has over its operations and compliance with the rules

Question 7

What does the Other (common interrogatories) section focus on?

Answer 7

pmts made to trade, service ors, stat / rating bureaus
examples: ISO, AM Best
list orgs where pmt > 25% subtotal so reader can understand amount of influence or reliance company has on 1 org, bureau, or legislative matter

Question 8

What info on catastrophe exposure can the P&C interrogaries offer?

Answer 8

-what has entity done to protect from massive loss from cat
-method to calculate PML, what exposure(s) comprise this?
-does entity carry reinsurance prot for 1+ reinstatement, enough to cover PML

Question 9

Interrogatory related to finite reinsurance

Answer 9

questions if insurer partaked in reinsurance transaction that
UW gain (loss) or ceded WP>= 5% prior PHS
accounted as reinsurance
1+ of these features
duration > 2yrs
aggregate stop loss coverage
delayed timing of reimbursement to the ceding company
ability to report / pay losses less frequently than quarterly

Question 10

if either of 2 interrogatories regarding finite reinsurance are answered affirmatively what is required of the insurer

Answer 10

file the Reinsurance Summary Supplemental filing with AS
disclose:
financial impact if such contracts were excluded
summary of applicable terms that triggered the affirmative response
reason(s) management entered the contract, expected financial gain
used to identify contracts that may have been accounted for improperly

Question 11

What other items in the P&C interrogatories can be of importance to an actuary?

Answer 11

• Whether there are specific limiting provisions within reinsurance contracts, guaranteed policies and retrospectively rated policies, as these features may affect the actuary’s evaluation of unpaid claims
• Any releases of liability under reinsured policies, such that the company could re-assume liability and potentially have its surplus position weakened as a result.
• Exposure to warranty business, whereby the adequacy of the unearned premium reserve would be the focus of attention as the contract terms, and therefore exposure, tends to continue beyond 12 months.