Actuarial Standards Board News

The Actuarial Standards Board of the American Academy of Actuaries recently approved a second exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 41, Actuarial Communications. The ASOP applies to actuaries when issuing actuarial communications in any form (written, electronic, or oral) within any practice area. The standard does not apply to actuaries when issuing a communication that does not include the rendering of actuarial services. 

The first exposure draft was released in June 2022 with a comment deadline of Nov. 1, 2022. Thirty-eight comment letters were received and considered in making changes that are reflected in the second exposure draft. Notable changes from the first exposure draft include adding definitions for “actuarial conclusions” and “actuarial report”; removing definitions for “actuarial finding” and “oral communications” and any related guidance on the latter; and adding guidance regarding the risk of misuse of actuarial communications as well as guidance regarding when to issue an actuarial report.

The comment deadline is Feb. 15, 2025. Information on how to submit comments can be found in the draft.

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The Actuarial Standards Board of the American Academy of Actuaries recently approved a second exposure draft on a proposed new ASOP titled Enterprise Risk Management. The ASOP provides guidance to actuaries when performing actuarial services with respect to developing, maintaining, or reviewing all or part of an enterprise risk management framework. 

Notable changes from the exposure draft, which received 15 comment letters, include adding guidance to limit the scope of the standard; including a definition for “risk classification”; and streamlining guidance on the risk appetite framework. The comment deadline is Nov. 1, 2024. Information on how to submit comments can be found in the draft.

The Actuarial Standards Board of the American Academy of Actuaries recently adopted a revision of ASOP No. 24, now titled NAIC Life Insurance Illustrations Model Regulation.

The ASOP, which underwent three exposure periods and received 10 comment letters, provides guidance to actuaries when performing actuarial services in support of a certification or representation that life insurance illustrated scales are in conformity with the National Association of Insurance Commissioners (NAIC) Life Insurance Illustrations Model Regulation (Model) or applicable actuarial guidelines (applicable AGs). 

Notable changes include introducing the new term “applicable actuarial guideline (applicable AG)”; adding guidance on consistency of experience factors; and revising and updating guidance to include a reference to the scope of and any limitations imposed by an applicable AG. The effective date for this revision of ASOP No. 24 is Dec. 1, 2024.

The Actuarial Standards Board of the American Academy of Actuaries approved an exposure draft of a proposed new actuarial standard of practice (ASOP) titled Pricing Reinsurance or Similar Risk Transfer Transactions Involving Life Insurance, Annuities, or Long-Duration Health Benefit Plans. The proposed standard applies to actuaries when performing actuarial services with respect to the pricing of reinsurance transactions or similar risk transfer transactions from the assuming entity perspective involving life insurance, annuities, or long-duration health benefit plans. 

The ASB recognized that pricing of reinsurance assumed for life, annuities, and health benefit plans as well as management of nonguaranteed reinsurance elements are significant areas of practice that lacked guidance, and thus appointed a task force in April 2021 to develop a new ASOP on pricing reinsurance involving life insurance, annuities, and long-duration health benefit plans from an assuming company perspective. The ASB appreciates comments and suggestions on all areas of the proposed standard as well as feedback on questions, including:

1. Does the ASOP scope appropriately cover reinsurance pricing involving life and annuity products?
2. Does the ASOP provide appropriate guidance on pricing-related activities (such as administration and treaties) and pricing activities subsequent to initial pricing (such as monitoring and nonguaranteed element management)?

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