Actuarial Standards Board News

The ASB recently approved a revision of ASOP No. 38 for exposure, now titled Catastrophe Modeling (for All Practice Areas). The proposed revision will apply to actuaries in all practice areas performing professional services when selecting or using catastrophe models, whether or not they are proprietary in nature.

Comments are being sought on various areas of the ASOP including, Whether it's clear that the proposed revised ASOP applies to all practice areas; whether the inclusion of other perils such as "terrorist acts and pandemics" in the definition of "Catastrophe Model," is appropriate; and whether the proposed revised ASOP is flexible enough to allow for new developments in practice. The comment deadline for the exposure draft is December 30, 2013.

The ASB recently approved an exposure draft of a revision of ASOP No. 8 now titled Regulatory Filings for Health Benefits, Health Insurance, and Entities Providing Health Benefits. Due to the significant number of changes in the rate filing and rate review process due to the Affordable Care Act, revisions to the current ASOP No. 8, Regulatory Filings for Health Plan Entities, were needed as the current ASOP No. 8 did not provide adequate guidance in the current environment.

Revisions to ASOP No. 8 will give guidance to actuaries that must prepare rate filings under more rigorous state and federal requirements for filing health insurance premium rate increases. It also provides further guidance to actuaries reviewing regulatory filings either as peer reviewers or as regulatory actuaries. The comment deadline for the exposure draft is October 15, 2013 and can be viewed under the tab “Exposure Drafts.”

The ASB adopted a revised version of the Introductory Actuarial Standard of Practice. The Introduction was revised to clarify the meaning of such terms as “must” and “should”; to include a definition of “deviation”; and to make other revisions to the language that were not substantial but did help clarify meaning in various sections. Also, to reinforce that the Introduction contains guidance that must be followed, it has been numbered as ASOP No. 1. Subsequently, the existing ASOP No. 1, Nonguaranteed Charges or Benefits for Life Insurance Policies and Annuity Contracts, is renumbered as ASOP No. 2, since the existing ASOP No. 2, Recommendations for Actuarial Communications Related to Statements of Financial Accounting Standards Nos. 87 and 88, was repealed in March 2011. The effective date for the revised Introduction is June 1, 2013. The ASOP can be viewed under the tab “Current Actuarial Standards of Practice.”

The next regularly scheduled meeting of the ASB will be held December 9–10, 2013, at the Academy offices in Washington, D.C.

The ASB approved the exposure draft, Principle-Based Reserves for Life Products. The proposed standard applies to actuaries when performing professional services on behalf of life insurers, including fraternal benefit societies, in connection with the calculation or review of reserves for individual life insurance policies, where such reserves are represented as being in compliance with the provisions of the Standard Valuation Law and the Valuation Manual governing principle-based reserves. The comment deadline for the exposure draft is December 16, 2013 and can be viewed under the tab “Exposure Drafts.”