Casualty Quarterly, Winter 2022–2023

COPLFR Resources Include P/C Law Manual, Annual Practice Note

By Stephen Koca, Chairperson, COPLFR

KocaFor actuaries who work on unpaid claim analyses and loss reserve opinion writing, the first quarter of the year is quite busy. For the Casualty Practice Council’s (CPC) Committee on Property and Liability Financial Reporting (COPLFR), the months leading up to opinion-writing season are the busiest of the year, as they prepare the Academy’s three major work products that assist P/C actuaries that write opinions.

The annual property/casualty (P/C) opinion practice note, P/C opinion seminar, and the P/C Loss Reserve Law Manual are three annual COPFLR offerings. While COPLFR’s work is not binding, these are commonly cited resources that assist actuaries with discussion and illustration of standard professional practice, and with changes in requirements per the NAIC and/or individual state regulatory departments. While opinion-focused materials are what COPLFR is best known for, the committee is also active throughout the year on other financial reporting topics. As the new chairperson, I wanted to use this opportunity as a reminder of the wealth of resources COPLFR provides for the profession.

COPLFR monitors activities regarding financial reporting related to property and liability risks, reviews proposals made by various organizations affecting the actuarial aspects of financial reporting and auditing issues related to property and liability risks, and evaluates property and liability insurance and self-insurance accounting issues. The committee frequently interacts with the National Association of Insurance Commissioners’ (NAIC) Casualty Actuarial Statistical Task Force (CASTF) as well as NAIC’s Blanks (E) Working Group.

P/C Loss Reserve Law Manual

The annual P/C Loss Reserve Law Manual contains useful information to help appointed actuaries comply with NAIC Statements of Annual Opinion requirements (SAOs). It includes  citation of state laws and regulations establishing those requirements; Annual Statement instructions for the SAOs for P/C and title insurance, and loss expense reserves; and other pertinent Annual Statement instructions. The 2022 version of the law manual will be released soon; pre-order your copy here.

Annual P/C Opinion Practice Note

Released every December, the Statements of Actuarial Opinion on Property and Casualty Loss Reserves practice note provides information to actuaries on current or emerging practices relevant to signing NAIC P/C SAOs and actuarial opinion summaries (AOSs). It is intended to assist actuaries by describing practices that COPLFR believes are commonly employed in issuing SAOs and AOSs on loss and loss-adjustment expense reserves in compliance with the P/C Annual Statement Instructions for 2022 issued by the NAIC. Click here for the practice note.

Seminar on Effective P/C Loss Reserve Opinions

Attendees at a P/C Opinion Seminar session

The annual Seminar on Effective P/C Loss Reserve Opinions, held recently on Dec. 5–6 in Phoenix, offered reserving actuaries in attendance  to learn (and sometimes relearn) opinion writing, processes, and best practices. The seminar’s collegial environment provides an opportunity for reserving actuaries to connect with and learn from one another before opinion-writing season kicks off. Attendees gained significant hours of continuing education (CE) credit—along with professionalism credit, and bias credit under the revised U.S. Qualification Standards (USQS)— and heard comments throughout from a state regulator who volunteers on the faculty, Sue Gozzo Andrews. Seminar faculty chairperson was Dawn Fowle, and Aaron Hillebrandt was vice chairperson. This year’s seminar was the first fully in-person such event since 2019, with every seat in the Phoenix event space filled. Be on the lookout for information on next year’s seminar, and COPLFR is planning a follow-up webinar in January.

Risk Transfer Practice Note

COPLFR released an updated Risk Transfer Practice Note this fall, following an original version released in 2007. The update includes definitions and discussion of relationships between regulatory treatments of risk transfer; with sections on accounting standards (e.g., U.S. statutory, U.S. GAAP, IFRS 4 and IFRS 17; Solvency II; the process for determination of risk transfer; current techniques used in practice for determining risk transfer; and risk transfer documentation. The practice note authors presented in an Oct. 25 CPC webinar, “2022 Update to the P/C Risk Transfer Practice Note,” and on a panel discussion during September’s Casualty Loss Reserve Seminar to provide an overview of the changes.

Comment Letters

In the past year, COPLFR members have participated in comment letters to the Actuarial Standards Board (ASB) on the exposures to actuarial standards of practice (ASOPs; see Public Policy in Brief, below). COPLFR commented to the Blanks working group on exposures related to P/C annual statements.

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P/C Practice-Area Highlights From Envision Tomorrow

New Academy Officers Include Casualty VP Amy Angell

AngellThe Academy’s “Envision Tomorrow: 2022 Annual Meeting,” held Nov. 2–3 in Washington, D.C., explored top P/C issues in a number of sessions at the event. Several Academy casualty volunteers were spotlighted during the event.

New officers joining the Board include former Casualty Vice President Lisa Slotznick, who became the Academy’s president-elect. Slotznick is also a past COPLFR member and chairperson. Amy Angell became the Academy’s new casualty vice president, succeeding Lauren Cavanaugh. Outgoing COPLFR Chairperson Derek Freihaut became a member-selected director.

In addition, two casualty volunteers were among the recipients of the Academy’s annual Outstanding Volunteerism Award (OVA):

• Dave Evans received an OVA for his contributions as a member of the P/C Extreme Events and Property Lines Committee, in calling attention to the committee’s important work, including leading the update of the Academy’s well-received issue paper on wildfire risk.
• Norman Niami received an OVA for his leadership and high level of engagement in promoting the outstanding work of the CPC’s Cyber Risk Committee, which he chairs, including multiple updates to the committee’s Cyber Risk Toolkit, with more planned soon.

P/C Breakout Sessions

Climate Change session presenters

Outgoing Casualty Vice President Lauren Cavanaugh also was a panelist in a diversity, equity & inclusion (DEI) general session panel on DEI across all practice areas. Casualty practice-area representatives also participated in panel discussions in the “Big Data & Analytics” and “Inflation Nation” general sessions. The event included three P/C breakout sessions, which featured high-profile and expert presenters. Niami chaired a “Cyber Risk” session; Cavanaugh chaired a “Pricing and Underwriting” session; and Slotznick chaired a “Climate Change” session.

For full coverage, see the November Actuarial Update supplement, Envision Tomorrow: A Closer Look.

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CPC Hosts P/C Public Policy Webinar

The Casualty Practice Council hosted a Dec. 20 webinar, “P/C Public Policy Update—Winter 2022.” Topics included an overview and update on P/C risk-based capital (RBC), medical marijuana in workers’ compensation, and methods to identify bias. Presenters were David Traugott, chairperson of the P/C RBC Committee; Krystal Ross, a member of the Workers’ Compensation Committee; and P/C Committee on Equity and Fairness members Susan Kent and Mike Woods. Casualty Vice President Amy Angell moderated. Slides and audio are available free of charge as a member benefit.

P/C Webinar Looks at ILS, Catastrophe Bonds

A CPC webinar, “Insurance-Linked Securities and Catastrophe Bonds,” examined catastrophe bonds, a subset of insurance-linked securities (ILS), which are debt-like investment instruments providing risk coverage to reinsurance entities and self-insureds. The webinar focused on the P/C Extreme Events and Property Lines Committee’s public policy issue paper, Insurance-Linked Securities and Catastrophe Bonds. Ralph Blanchard and Academy Senior Casualty Fellow Rich Gibson presented, and committee chairperson Jeri Xu participated in the following Q&A. Slides and audio are available free to logged-in Academy members.

Senior Casualty Fellow Gibson Speaks on Hurricane Ian & Insurance

GibsonJust days after Hurricane Ian struck Florida and South Carolina, Academy Senior Casualty Fellow Rich Gibson spoke in early October with National Public Radio’s (NPR) “Morning Edition,” which NPR calls “the most listened-to news radio program in the country.” Gibson directed his comments to help the public understand different insurance coverages that may respond to hurricane-related damage, and pointed listeners affected by the storm’s damage to helpful insurance resources. Listen to the interview here.

CPC/COPLFR Present to CASTF

Outgoing Casualty Vice President Lauren Cavanaugh and Derek Freihaut, outgoing COPLFR chairperson and incoming Academy Board member, presented in early November to CASTF’s virtual meeting in lieu of NAIC’s Fall 2022 National Meeting on behalf of the CPC and COPLFR, covering recent publications and future work products expected for release early next year.

Academy Representatives Present at CLRS

Slotznick presents at CLRS

The Academy and the Casualty Actuarial Society (CAS) co-hosted the annual Casualty Loss Reserve Seminar, held in St. Louis in September, in which Academy representatives presented on multiple topics. Academy President-Elect Lisa Slotznick co-presented with the CAS’ Ken Williams in a professionalism session on the recently revised USQS. Academy Assistant Director for Research (Public Policy) Steve Jackson moderated a “Can’t Stand the Heat” panel that looked at physical risk and disclosures related to climate change and the Actuaries Climate Risk Index (ACRI), and presented research originating in the ERM/ORSA Committee’s Climate Related Financial Disclosures Work Group.

Issue Brief Examines Telehealth & Workers’ Compensation

The Workers’ Compensation Committee released an issue brief discussing the growing importance of telehealth for health care providers and workers’ compensation insurers, variations across different states, and the opportunities for the actuarial profession to help all parties involved better direct their efforts and maximize the return of any telehealth initiatives.