Adopted as-is — accepted in the original. The Kazakhstan Chamber of Actuaries (KCA) adopts this Actuarial Standard of Practice in its original English form, as published by the Actuarial Standards Board (ASB), United States, without modification. The full original ASB text is reproduced below for reference. The Russian and Kazakh catalogue entries are KCA adaptations; in case of any discrepancy the original ASB text prevails.
Repeal of Actuarial Standard of Practice No. 9
Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations
Developed by the Casualty Committee of the Actuarial Standards Board
Repealed by the Actuarial Standards Board March 2011
(Doc. No. 105)
T A B L E O F C O N T E N T S
Transmittal Memorandum Appendix 1 Appendix 2—Comments on the Exposure Draft and Responses
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March 2011
TO: Members of Actuarial Organizations Governed by the Standards of Practice of the Actuarial Standards Board and Other Persons Interested in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations
FROM: Actuarial Standards Board (ASB)
SUBJ: Repeal of Actuarial Standard of Practice (ASOP) No. 9
ASOP No. 9, Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations , has been repealed by the ASB .
Background
ASOP No. 9, Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations , was adopted in 1991 and relied heavily on Interpretative Opinion No.3 of the Guides and Interpretative Opinions as to Professional Conduct of the American Academy of Actuaries. The following Casualty Actuarial Society documents were attached to ASOP No. 9 as separate appendices:
Statement of Principles Regarding Property and Casualty Ratemaking;
Statement of Principles Regarding Property and Casualty Loss and Loss Adjustment Expense Reserves ; and
Statement of Principles Regarding Property and Casualty Valuations .
In 2002, the ASB repealed Interpretative Opinion 3: Professional Communications of Actuaries when the Board adopted ASOP No. 41, Actuarial Communications, which superseded the guidance of Interpretative Opinion No. 3. ASOP No. 41 is applicable to all areas of actuarial practice and provides guidance with respect to written, electronic, or oral communications.
The Casualty Committee of the ASB has reviewed ASOP No. 9 and compared the various sections to ASOP No. 41 as well as the Code of Professional Conduct . The Committee believes that the topics in ASOP No. 9 are adequately covered in ASOP No. 41, other ASOPs, and the Code of Professional Conduct , and concluded that ASOP No. 9 should be repealed.
Exposure Draft
The exposure draft of this repeal document was issued in June 2007 with a comment deadline of August 15, 2007. Seven comment letters were received and were considered in finalizing this repeal document. For a summary of the substantive issues and the reviewers’ responses, please see appendix 2.
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The ASB reviewed the comment letters in March 2008 and decided to defer repeal of ASOP No. 9 in order to coordinate with the adoption of the ASOP No. 41 revision. The ASB adopted a revised version of ASOP No. 41 in December 2010, effective May 1, 2011.
The ASB thanks all who commented on the repeal.
Action
The ASB voted in March 2011 to repeal ASOP No. 9 effective for actuarial communications issued on or after May 1, 2011.
Casualty Committee of the ASB
Beth Fitzgerald, Chairperson Shawna S. Ackerman David J. Otto Raji Bhagavatula Marc B. Pearl Kenneth R. Kasner Jonathan White Dale F. Ogden
Actuarial Standards Board
Albert J. Beer, Chairperson
Alan D. Ford Patricia E. Matson Patrick J. Grannan Robert G. Meilander Stephen G. Kellison James J. Murphy Thomas D. Levy James F. Verlautz
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Appendix 1
Note : This appendix is prepared for informational purposes only.
The Casualty Committee prepared the following grid highlighting sections of ASOP No. 9 as a cross reference against ASOP No. 41, Actuarial Communications (effective May 1, 2011), other ASOPs and the Code of Professional Conduct to reflect where appropriate actuarial guidance already exists for the related item or where the item would have been considered educational material and, therefore, not included in any proposed revision other than possibly an appendix.
| Sections of ASOP No. 9 | Reference to ASOP No. 41, other ASOPs or the Code of Professional Conduct |
|
|---|---|---|
| Section 2 | Definitions | |
| 2.1 | Actuarial Report | ASOP No. 41 (2.4) |
| 2.2 | Actuarial Work Product | ASOP No. 41 (2.1, 2.3, 2.4) |
| 2.3 | Required Actuarial Documentation | ASOP No. 41 (2.1) |
| 2.4 | Statement of Actuarial Opinion | ASOP No. 41 (2.1) |
| 2.5 | Statement of Actuarial Review | ASOP No. 41 (2.1) |
| Section 3 | Background and Historical Issues | Educational–not needed in standard |
| Section 4 | Current Practices and Alternatives | Educational–not needed in standard |
| Section 5 | Analysis of Issues and Recommended Practices |
|
| 5.1 | Introduction | ASOP No. 41 (3.1, 3.1.1-3.1.2) |
| 5.2 | Extent of Documentation | ASOP No. 41 (3.2, 3.8); ASOP No. 43 (4.2(b)); ASOP No. 36 (4.2(a)); ASOP No. 13 (4.2(b)) |
| 5.3 | Prevention of Misuse | ASOP No. 41 (3.7);Code of Professional Conduct(Precept 8 and Annotation 8.1) |
| 5.4 | Disclosure of Conflict with Professional Judgment, and Advocacy |
ASOP No. 41 (3.4.2, 4.3) |
| 5.5 | Availability of Documentation | ASOP No. 41 (3.2, 3.7);Code of Professional Conduct(Annotation 10-5) |
| 5.6 | Conflicting Interests | ASOP No. 41 (3.4.2, 3.7);Code of Professional Conduct(Precept 7) |
| 5.7 | Signature on Work Product | ASOP No. 41 (3.1.4) |
| 5.8 | Reliance on Another | ASOP No. 41 (3.4.3, 3.4.4) |
| 5.9 | Waiver of Fee | Code of Professional Conduct(Precept 3) |
| 6.1 | Deviation from Standard | ASOP No. 41 (4) |
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Appendix 2
Comments on the Exposure Draft and Responses
The exposure draft of the repeal of ASOP No. 9, Documentation and Disclosure in Property and Casualty Insurance Ratemaking, Loss Reserving, and Valuations , was issued to the membership in June 2007 with a comment deadline of August 15, 2007. Seven comment letters were received. The Casualty Committee and the ASB carefully considered all comments received. Summarized below are the significant issues and questions contained in the comments and responses to each. The term “reviewers” in appendix 2 refers to the Casualty Committee and the ASB.
| GENERAL COMMENTS | |
|---|---|
| Comment Response |
One commentator said that the inclusion of the Statement of Principles (Principles) in the appendix of the ASOP gave higher visibility to the Principles. The commentator suggested that the Academy and the ASB find a way to retain access and visibility of the Principles. The reviewers note that the Principles are not issued or maintained by the ASB. The Principles arereadily available onthe CasualtyActuarialSociety (CAS) website. |
| Comment Response |
It was noted by a commentator that it was not clear whether the Principles were being retained or repealed. The action of the ASB to repeal ASOP No. 9 will have no direct impact on the retention or repealofthePrinciples since they areissued by the CAS. |
| Comment Response |
One commentator stated that the overlap between ASOP No. 9 and ASOP No. 41, Actuarial Communications, was not complete. The repeal of ASOP No. 9 would omit several key items. The commentator suggested that the ASB should revise ASOP No. 41 so that appropriate items from ASOP No. 9 are included. It is the reviewers’ belief that key items within ASOP No. 9 are adequately covered in other ASOPs and the Code of Professional Conduct. |
| Comment Response |
One commentator noted that the Annual Statement Instructions for the Statutory Statement of Actuarial Opinion for loss reserves provide references to various ASOPs, specifically including ASOP No. 9. The Casualty Actuarial Task Force (CATF) of the National Association of Insurance Commissioners (NAIC) in its Annual Guidance publications references and quotes directly from definition 2.1 of ASOP No. 9. In addition, in its comments on ASOP No. 43,Property/Casualty Unpaid Claim Estimates, the CATF stressed the importance of ASOP No. 9 to regulators and ASOP No. 9’s relevance to ASOP No. 43. The reviewers note that references to ASOP No. 9 can be replaced by references to ASOP No. 41, other ASOPs, and the_Code of Professional Conduct_. Until these references are changed, appendix 1 of the repeal document for ASOP No. 9 provides the appropriate cross references. |
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| Comment Response |
Several commentators stated ASOP No. 41 sets a lower standard of practice than ASOP No. 9. They commented that ASOP No. 9 is not redundant with ASOP No. 41 and, in fact, ASOP No. 41 has weaker language in several instances. The reviewers compared ASOP No. 9 to the relevant sections of other ASOPs as well as the_Code of Professional Conduct_. The reviewers concluded that the guidance in ASOP No. 9 is adequately covered in ASOP No. 41, other ASOPs, and the_Code of Professional_ Conduct. |
|---|---|
| SECTION 2. DEFINITIONS | |
| Section 2.1, Actuarial Report | |
| Comment Response |
Several commentators noted that ASOP No. 9 in this section sets a higher standard than ASOP No. 41 since ASOP No. 9 includes additional language stating that the actuary was “ensuring that the parties addressed are aware of the significance of the actuary’s opinion or finding.” Failure to include this language weakens the resulting standard and opens the door to placing the burden of determining the significance on the addressees (often regulators). The reviewers believe this issue is adequately addressed by ASOP No. 41, sections 3.1 and 3.2. |
| SECTION 5. ANALYSIS OF ISSUES AND RECOMMENDED PRACTICES | |
| Section 5.2, Extent of Documentation | |
| Comment Response |
Several commentators noted that, particularly with regard to reserves, the elimination of language requiring the actuary to document any material changes in sources of data, assumptions, or methods from the last analysis, and to explain the reason and describe the impact of these changes, is a relaxation of the standard. Most of these commentators believe that ASOP No. 9 requires quantification of the impact of these changes. It was further suggested that no similar language is found in other ASOPs or the_Code of_ Professional Conduct. The reviewers note that similar language exists within other ASOPs, including those applying to reserves. For example, the reviewers refer the readers to ASOP No. 43, section 4.2(b); ASOP No. 36, section 4.2(a); and ASOP No. 13, section 4.2(b). The reviewers also believe that the requirement to “describe the impact of these changes” in ASOP No. 9 does notrequire a quantificationoftheimpact. |
| Comment Response |
One commentator noted that ASOP No. 9 requires documentation to be sufficient for another actuary practicing in the same field “to evaluate the work,” whereas ASOP No. 41 requires documentation to be sufficient for another actuary practicing in the same field “to evaluate the reasonableness of the actuary’s work.” Thereviewers donot believe this differenceismaterial. |
| Section 5.4, Disclosure of Conflict with Professional Judgment, and of Advocacy | |
| Comment Response |
One commentator noted that ASOP No. 41 omits the requirement that the actuary should advise the principal of a conflict of professional judgment and include qualifications in the actuarial communication. It is the reviewers’ belief that this topic is adequately addressed in ASOP No. 41, sections 3.4.4and4.3. |
| Section 5.5, Availability of Documentation |
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| Comment Response |
One commentator noted that the correspondence between this section and ASOP No. 41 was not at all clear. While some intent of section 5.5 may overlap with sections of ASOP No. 41 and Precept 10 of the_Code of Professional Conduct_, section 5.5 is broader. Section 5.5 of ASOP No. 9 makes three basic statements: (1) Documentation should be available to the actuary’s client or employer; (2) Documentation should be available to others when the client or employer requests if adequate compensation is made, and it is not improper; and (3) Ownership of documentation is established in accordance with law. Sections 2.4 and 3.2 of ASOP No. 41 provide guidance on documentation to be made available to intended users. The second statement is addressed in Precept 10 of the_Code of_ Professional Conduct, which requires the actuary to cooperate in furnishing relevant information, subject to receiving reasonable compensation, when a principal has given consent. The third statement does not establish a requirement but rather notes that ownership is determined by laws outside control of the ASB. The reviewers believe removing this statement shouldnotimpact the applicationof law. |
|---|---|
| Section 5.6, Conflicting Interests | |
| Comment Response |
One commentator noted that it was not clear that the indirect user would be covered under the term “prospective principal” as used in the_Code of Professional Conduct. The reviewers believe that the language found in Precept 8 of the_Code of Professional _Conduct _provides sufficient guidanceregardingindirect users. |
| Section 5.9, Waiver of Fee | |
| Comment Response |
One commentator noted that in Precept 3 of the_Code of Professional Conduct_the issue of waived fees is not addressed. The reviewers note that Precept 3 requires the actuary to satisfy professional standards regardless ofwhetherthereis any compensation. |
| SECTION 6. COMMUNICATIONS AND DISCLOSURES | |
| Section 6.1, Deviation from Standard | |
| Comment Response |
One commentator noted that while ASOP No. 41 has a similarly titled section, Deviation from Standard, ASOP No. 9 contains additional language requiring an appropriate and explicit statement with respect to the nature, rationale, and effect of such deviation. ASOP No. 41 merely requires that the actuary justify deviation from the standard. Thereviewers believe that section 4of ASOPNo.41adequately addresses thisissue. |
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