Professionalism Counts, June 2024
Standards Roundup: ASB Adopts Five Revised ASOPs
In recent years, the Actuarial Standards Board (ASB) approved a number of proposals to revise actuarial standards of practice (ASOPs). Now, after countless hours of dedicated work by the task forces, committees, and the ASB itself—and valuable input from many of you—final versions of these ASOPs are emerging. During the past few months, the ASB has adopted five revised ASOPs. Let’s take a look.
▶ ASOP No. 27, Selection of Assumptions for Measuring Pension Obligations. The revised ASOP No. 27 combines the previous ASOP No. 27, Selection of Economic Assumptions for Measuring Pension Obligations, and ASOP No. 35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations. The revised standard provides guidance to actuaries when performing actuarial services that involve selecting assumptions, including giving advice on selecting assumptions, for measuring defined benefit pension plan obligations. ASOP No. 27 is effective for any actuarial report that meets the following criteria: (a) the actuarial report is issued on or after Jan. 1, 2025; and (b) the measurement date in the actuarial report is on or after Jan. 1, 2025. When the new ASOP No. 27 takes effect, ASOP No. 35 will be repealed.
▶ ASOP No. 28, Statements of Actuarial Opinion Regarding Health Insurance Assets and Liabilities. The scope of ASOP No. 28 was revised to eliminate a conflict with ASOP No. 36, Statements of Actuarial Opinion Regarding Property/Casualty Loss, Loss Adjustment Expense, or Other Reserves, and states that other ASOPs may apply to actuaries issuing or reviewing statements of actuarial opinion that include both health insurance assets and liabilities, and non-health insurance assets and liabilities. The revised ASOP No. 28 takes effect Oct. 1, 2024.
▶ ASOP No. 29, Expense Provisions for Prospective Property/Casualty Risk Transfer and Risk Retention. The scope of ASOP No. 29 has been broadened to apply to actuaries when performing actuarial services with respect to developing or reviewing expense provisions for prospective property/casualty risk transfer or risk retention. This includes expense provisions developed or reviewed for insurance, reinsurance, self-insurance, loss portfolio transfers, or other mechanisms for prospective property/casualty risk transfer or risk retention. The revised ASOP No. 29 takes effect July 1, 2024.
▶ ASOP No. 36, Statements of Actuarial Opinion Regarding Property/Casualty Loss, Loss Adjustment Expense, or Other Reserves. The scope of the standard has been expanded beyond “issuing” and “providing” to “performing actuarial services with respect to a written statement of actuarial opinion regarding property/casualty loss, loss adjustment expense, or other reserves.” In addition, the scope was expanded to include other reserves and clarifies that this standard applies to the statements of actuarial opinion on reserves of other property/casualty risk financing systems. The revised ASOP No. 36 takes effect on Oct. 1, 2024.
▶ ASOP No. 40, Compliance with the NAIC Valuation of Life Insurance Policies Model Regulation with Respect to X Factors. The ASOP applies to actuaries when performing actuarial services with respect to adjusting deficiency reserve mortality rates using X factors pursuant to applicable law, including applicable law based on the National Association of Insurance Commissioners Valuation of Life Insurance Policies Model Regulation (Model). The standard provides specific guidance for actuaries complying with requirements consistent with the Model. Actuaries complying with requirements that differ materially from the Model should apply the guidance in the standard to the extent appropriate. In addition, the standard now applies to all actuaries performing actuarial services related to compliance with the Model, rather than only to the appointed actuary. The revised ASOP No. 40 takes effect for all statements of actuarial opinion provided for reserves with a valuation date on or after Sept. 15, 2024.
Plenty of ASOPs are still in the pipeline. Please be on the lookout for exposure drafts later this summer and consider submitting comments. Your comments are highly valued, provide vital input to new and revised standards, and help keep the actuarial profession strong.
