Actuarial Standards Board News

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.

The Actuarial Standards Board (ASB) of the American Academy of Actuaries approved an exposure draft of a new ASOP on enterprise risk management to replace ASOP Nos. 46 and 47, Risk Evaluation in Enterprise Risk Management and Risk Treatment in Enterprise Risk Management, respectively. The proposed ASOP, titled Enterprise Risk Management, provides guidance to actuaries when performing actuarial services with respect to developing, maintaining, or reviewing all or part of an enterprise risk management (ERM) framework.

ASOP Nos. 46 and 47 were the first ASOPs applying specifically to actuaries performing actuarial services for the purposes of ERM. Both ASOPs were adopted by the ASB in 2012. In the years since ASOP Nos. 46 and 47 were adopted, actuarial practice in the field of ERM has evolved considerably, with many actuaries now working as risk practitioners and a number working in senior risk roles, including chief risk officer. Moreover, ERM nomenclature has also evolved. Additionally, ASOP No. 55, Capital Adequacy Assessment, covering topics with strong connections to ERM, was adopted by the ASB in 2019. Therefore, the ASB decided to revise ASOP Nos. 46 and 47 to reflect the developments of the past decade, to better reflect today’s ERM practices and terminology, and to align with ASOP No. 55. The comment deadline is Sept. 15, 2023. Information on how to submit comments can be found in the exposure draft.