ASB Headlines
ASB Approves Exposure Draft on ERM Risk Evaluation
The ASB recently approved an exposure draft on Risk Evaluation in Enterprise Risk Management. In early 2011, the ERM Task Force of the ASB issued discussion drafts on the topics of risk evaluation and risk treatment to gain feedback regarding guidance in these areas of practice. As a result of the comments received, work on the development of exposure drafts in these areas began. The proposed ASOP on risk evaluation provides guidance to actuaries when performing professional services with respect to risk evaluation systems, including designing, implementing, using, and reviewing those systems. An exposure draft on risk treatment is scheduled to be reviewed in summer 2012. The comment deadline for the risk evaluation exposure draft is June 30, 2012 and can be viewed under the “Exposure Drafts” tab.
ASB Exposes Revisions to ASOP Nos. 22 and 28
The ASB recently approved an exposure draft of revisions to ASOP No. 22, Statements of Opinion Based on Asset Adequacy Analysis by Actuaries for Life and Health Insurers, and ASOP No. 28, Statements of Actuarial Opinion Regarding Health Insurance Liabilities and Assets. ASOP No. 28 provides an explicit exclusion for actuaries preparing statements of actuarial opinion for life insurance companies. The ASB believes that the standards of practice delineated in ASOP No. 28 are appropriate for health insurance liabilities and health insurance assets included in statements of actuarial opinion for life insurance companies, and should be made applicable. The exposure draft provides new language for certain sections of ASOP Nos. 22 and 28. Section 3.1 of ASOP No. 22 is changed to indicate that the actuary should review and apply ASOP No. 28 in doing work covered by ASOP No. 22. In addition, the definition of Health Benefit Plan in ASOP No. 22 is changed to be consistent with that in ASOP No. 28. Finally, the scope of ASOP No. 28 is changed to remove the exclusion for work covered by ASOP No. 22. The document can be viewed under the “Exposure Drafts” tab. The comment deadline is May 15, 2012.
ASB Approves Introduction Exposure Draft
The ASB recently approved an exposure draft of the newly revised Introduction, now titled Introductory Actuarial Standard of Practice. The Introduction was adopted in 2004 to replace a Preface to the standards that was adopted in 1989. The Introduction was intended to offer actuaries guidance on the ASB’s operations, the content and format of standards, and the ASB’s intent with respect to certain terms that appear frequently in the text of the standards themselves. The Introduction was updated in October 2008 to make clear that the ASB, in promulgating ASOPs, seeks to define an appropriate level of practice (rather than simply codifying current practices); to remove references to “prescribed statements of actuarial opinion” in light of revisions made to the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States; and to conform the provisions on deviations from the ASOPs to the deviation provisions of ASOP No. 41, Actuarial Communications, in accordance with the ASB’s project to standardize the “deviation” provisions in all ASOPs. The ASB received a number of comments on the Introduction at the time of the 2008 revision and concluded that further review would be appropriate. The proposed revision is a result of that review, and can be viewed under the “Exposure Drafts” tab. The comment deadline is May 31, 2012.
ASB Adopts ASOP No. 45
The ASB recently adopted its 45th ASOP,The Use of Health Status Based Risk Adjustment Methodologies. The new ASOP No. 45 provides guidance to actuaries applying health status based risk adjustment methodologies to quantify differences in relative healthcare resource use due to differences in health status. ASOP No. 45 is intended to provide guidance regarding the appropriate use of health status based risk adjustment models and methods, and requires actuaries to explicitly consider important characteristics of the risk adjustment models and their use, rather than allowing actuaries to assume important issues are already addressed within any given risk adjustment software model. The standard is effective for any professional services using health status based risk adjustment methodologies performed on or after July 1, 2012. The new ASOP can be viewed under the tab “Current Actuarial Standards of Practice.”
ASB Approves ASOP Nos. 4 and 27 Exposures
At its December meeting, the Actuarial Standards Board reviewed a proposed exposure draft of ASOP No. 4, Measuring Pension Obligations and Determining Pension Plan Costs or Contributions, and a proposed second exposure draft of ASOP No. 27, Selection of Economic Assumptions for Measuring Pension Obligations. ASOP No. 4, which was presented as a discussion draft in January 2011, is being revised to provide additional guidance on such issues as fully funded plans, spread gain actuarial cost methods, and types of actuarial present values of pension obligations. ASOP No. 27, which was released as an exposure draft also in January 2011, is being further revised in response to the twenty comment letters received on various issues such as geometric and arithmetic return, estimates and observations, and assumption rationale. Both drafts were approved by the ASB in January 2012, and can be viewed under the tab “Exposure Drafts.” The comment deadline for both drafts is May 31, 2012.
Discussion Draft on Modeling Presented to ASB
The ASB Life Committee presented a draft to the ASB titled Modeling in Life Insurance and Annuities. As it increasingly appears that models will be used for life insurance company financial reporting, the Life Committee believes it is appropriate to set a standard for actuarial modeling, at least in certain high importance and reliance situations, such as where the results of the model directly enter the financial report or are relied upon by at least one party in a merger, acquisition, securitization or other financial transaction. The discussion draft will be released for comment in early 2012. The Life Committee expects to create an exposure draft, thereafter, that will draw on the ideas in this discussion draft, modified by discussions with and comments received from interested parties and unfolding events. The exposure draft will go through the normal ASOP process.
ASB Completes Initial Review of ISAP 1
As requested by the Council of U.S. Presidents, the ASB recently completed a review of International Standard of Practice 1, General Actuarial Practice, to compare it to current Actuarial Standards of Practice that provide guidance to actuaries practicing in the United States. After a thorough review of its introduction, definitions, and content, the ASB concluded that ISAP 1 is materially in conformance with existing ASOPs, and that no action is required to revise any current ASOPs or to develop new ASOPs as a result. To view the ASB’s full comments on ISAP 1, click here.
ASB to Meet June 6–7 in Washington
The next regularly scheduled meeting of the ASB will be held June 6–7, 2012, at the Academy offices in Washington, D.C.
