Repeal of Actuarial Standard of Practice No. 9

Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations

TRANSMITTAL MEMORANDUM

March 2011

TO:  Members of Actuarial Organizations Governed by the Standards of Practice of the Actuarial Standards Board and Other Persons Interested in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations

FROM:  Actuarial Standards Board (ASB)

SUBJ:  Repeal of Actuarial Standard of Practice (ASOP) No. 9

ASOP No. 9, Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations, has been repealed by the ASB.

Background

ASOP No. 9, Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations, was adopted in 1991 and relied heavily on Interpretative Opinion No. 3 of the Guides and Interpretative Opinions as to Professional Conduct of the American Academy of Actuaries. The following Casualty Actuarial Society documents were attached to ASOP No. 9 as separate appendices:

• Statement of Principles Regarding Property and Casualty Ratemaking;

• Statement of Principles Regarding Property and Casualty Loss and Loss Adjustment Expense Reserves; and

• Statement of Principles Regarding Property and Casualty Valuations.

In 2002, the ASB repealed Interpretative Opinion 3: Professional Communications of Actuaries when the Board adopted ASOP No. 41, Actuarial Communications, which superseded the guidance of Interpretative Opinion No. 3. ASOP No. 41 is applicable to all areas of actuarial practice and provides guidance with respect to written, electronic, or oral communications.

The Casualty Committee of the ASB has reviewed ASOP No. 9 and compared the various sections to ASOP No. 41 as well as the Code of Professional Conduct. The Committee believes that the topics in ASOP No. 9 are adequately covered in ASOP No. 41, other ASOPs, and the Code of Professional Conduct, and concluded that ASOP No. 9 should be repealed.

Exposure Draft

The exposure draft of this repeal document was issued in June 2007 with a comment deadline of August 15, 2007. Seven comment letters were received and were considered in finalizing this repeal document. For a summary of the substantive issues and the reviewers’ responses, please see appendix 2.

The ASB reviewed the comment letters in March 2008 and decided to defer repeal of ASOP No. 9 in order to coordinate with the adoption of the ASOP No. 41 revision. The ASB adopted a revised version of ASOP No. 41 in December 2010, effective May 1, 2011.

The ASB thanks all who commented on the repeal.

Action

The ASB voted in March 2011 to repeal ASOP No. 9 effective for actuarial communications issued on or after May 1, 2011.

Casualty Committee of the ASB

Beth Fitzgerald, Chairperson

                      Shawna S. Ackerman                                         David J. Otto

                       Raji Bhagavatula                                              Marc B. Pearl

                       Kenneth R. Kasner                                            Jonathan White

                       Dale F. Ogden

Actuarial Standards Board

Albert J. Beer, Chairperson

                      Alan D. Ford                                                       Patricia E. Matson

                      Patrick J. Grannan                                              Robert G. Meilander

                     Stephen G. Kellison                                            James J. Murphy

                     Thomas D. Levy                                                  James F. Verlautz

Appendix 1

Note: This appendix is prepared for informational purposes only.

The Casualty Committee prepared the following grid highlighting sections of ASOP No. 9 as a cross reference against ASOP No. 41, Actuarial Communications (effective May 1, 2011), other ASOPs and the Code of Professional Conduct to reflect where appropriate actuarial guidance already exists for the related item or where the item would have been considered educational material and, therefore, not included in any proposed revision other than possibly an appendix.

Appendix 2

Comments on the Exposure Draft and Responses

The exposure draft of the repeal of ASOP No. 9, Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations, was issued to the membership in June 2007 with a comment deadline of August 15, 2007. Seven comment letters were received. The Casualty Committee and the ASB carefully considered all comments received.

Click here to view Appendix 2 in its entirety.