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:
- Does the ASOP scope appropriately cover reinsurance pricing involving life and annuity products?
- 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.
