Section D Flashcards
requirements for “Small companies” to be exempt from SAO
under $1M of total direct and assumed premiums written in a CY
AND
under $1M total direct & assumed loss & LAE reserves at year end
scope should include a paragraph about
the thoroughness of the examination of assumptions and methodology that support the booked reserves
Each item in Exhibit A must
contain a value (0 if appropriate)
things that item 6 in exhibit A could contain
accrual for DDR provisions in claims made policies
amount of discount for WC reserves
retroactive reinsurance ceded losses and LAE reserves
contingent liability
3 additional disclosures of scope
review date
data source (reconciled to schedule P or reviewed reconciliation)
stated basis of reserves
6 things included in stated basis of reserve presentation
discount risk margin gross or not of recoverables uncollectible receivables (state categories) types of unpaid LAE categories of loss included in opinion
Opinion wording (A-C)
In my opinion, the amounts carried in Exhibit A on account of the items identified:
A. Meet the requirements of the insurance laws of (state)
B. Are computed in accordance with accepted actuarial standards and principles
C. Make a reasonable provision for all unpaid loss and loss adjustment expense obligations of the Company under the terms of its contracts and agreements
If the scope includes unearned premiums reserves for Long Duration contracts (or other), part D
D. Make a reasonable provision for the unearned premium reserves for long duration contracts of the Company under the terms of its contracts and agreements
Alternative statement B in opinion paragraph if the actuary performed an independent analysis of the reserves
B. Are consistent with reserves computed in accordance with accepted actuarial standards and principles
If an actuary relied on the Opinion of another actuary for a material portion of the reserves covered by the scope, she must
identify that actuary (name, credential & affiliation) in the Opinion section
if an actuary used the work of a non-actuary for a material portion of the reserves, she must
identify the person by name and affiliation, as well as a description of the type of analysis performed
a loss portfolio transfer is treated as
retroactive reinsurance
the actuary usually opines on the reserves including the ___ even though these are not included in the loss reserve section of the balance sheet
retroactive reinsurance assumed
If there is a nonzero value in item 13 (other items) of exhibit b, the actuary should
include Relevant Comments about why the item is being included
relevant comment paragraphs that address material adverse deviation would contain:
- amount of deviation considered material
- explanation of how the standard was derived
- description of factors underlying the significant risks considered material
- statement about whether the actuary believes that there are significant risks or uncertainties that could result in material adverse deviation
