Actuarial Standards Board News

The Actuarial Standards Board (ASB) of the American Academy of Actuaries recently approved an exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 7, Life, Health, or Property/Casualty Insurance Cash Flow Risk. The proposed revision would apply to actuaries when performing actuarial services involving life or health cash flow risks, and also to actuaries when performing actuarial services involving property/casualty cash flow risks specific to investments. 

Notable changes to ASOP No. 7 include broadening section 1.2, Scope, to include cash flow analysis an actuary performs for a noninsurance entity that insures or self-insures risk. The scope was also changed to apply to actuaries when performing actuarial services involving P/C investment cash flow risk. In addition, guidance was adjusted to include all types of cash flow analysis and to address when to perform a cash flow analysis. 

As this standard applies to three practice areas, the ASB is asking for specific input from each practice area (see the Request for Comments section in the Transmittal Memo). In particular, the ASB asks three questions about how the standard applies to P/C actuaries, and one each for the life and health areas. Your input is important, so please take the time to review the draft and submit comments.

The comment deadline is June 1, 2024. Information on how to submit comments can be found in the draft.

The Actuarial Standards Board (ASB) of the American Academy of Actuaries approved a second exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 24, now titled Compliance with the NAIC Life Insurance Illustrations Model Regulation. The standard provides guidance to actuaries when performing actuarial services in support of a certification or representation that life insurance illustrated scales are in accordance with the National Association of Insurance Commissioners (NAIC) Life Insurance Illustrations Model Regulation (Model) or applicable actuarial guidelines. Such certification or representation may be made in an illustration actuary’s certification pursuant to applicable law based on the Model or may be made in the absence of an applicable law based on the Model. 

The first exposure draft was released in July 2021 and received two comment letters. Notable changes made to the exposure draft include clarifying the purpose and scope of the ASOP, reorganizing section 3, and clarifying guidance to explicitly recognize that experience factors may be developed based on a combination of the types of sources specified in this ASOP.

The comment deadline is Sept. 15, 2023. Information on how to submit comments can be found in the draft.

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The Actuarial Standards Board (ASB) of the American Academy of Actuaries approved an exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 40, now titled Compliance with the NAIC Valuation of Life Insurance Policies Model Regulation with Respect to X Factors. 

The ASOP provides guidance to actuaries when performing actuarial services with respect to adjusting deficiency reserve mortality rates using X factors pursuant to applicable law (statutes, regulations, and other legally binding authority), including applicable law based on the National Association of Insurance Commissioners (NAIC) Valuation of Life Insurance Policies Model Regulation (Model). 

Notable changes made in the exposure draft include making the ASOP applicable to all actuaries performing actuarial services related to compliance with the Model, rather than only to the appointed actuary; eliminating the descriptions of Model requirements; adding guidance related to the creation of X factor classes based on risk characteristics; and adding guidance for assessing mortality expectations compared to actual experience.

The comment deadline is Sept. 15, 2023. Information on how to submit comments can be found in the exposure draft.