Glossary

Statistical or other information that is generally numerical in nature or susceptible to quantification.

An item of information, such as date of birth or risk classification. (ASOP No. 23)

The components of a system used by underwriters to determine a set of mortality multiples to apply to a base mortality table. Debits increase the mortality multiple due to various impairments that an insured may have; credits reduce the mortality multiple due to good health characteristics. (ASOP No. 48)

Assets designated for the exclusive purpose of satisfying the retiree group benefits program obligations. Examples include the following:

a. life insurance policies held by the plan sponsor to cover some of the plan sponsor’s retired participant death benefits;

b. welfare benefit trusts (for example, voluntary employees’ beneficiary associations);

c. Internal Revenue Code section 401(h) accounts in a qualified pension plan; and

d. Internal Revenue Code section 115 trusts sponsored by governmental entities for retiree group benefits. (ASOP No. 6)

An asset representing the unamortized portion of policy acquisition expenses. (ASOP No. 10)

An asset representing the unamortized portion of sales inducements to policyholders. (ASOP No. 10)

The excess, if greater than zero, of minimum reserves calculated in accordance with section 8 of the model NAIC Standard Valuation Law over basic reserves. (ASOP No. 40)

A sudden and usually temporary increase in the cost of materials, services, and labor due to the increased demand for them following a catastrophe.

Demographic and all other noneconomic assumptions (i.e., those assumptions not covered in ASOP No. 27), unless explicitly stated otherwise.

The conversion of a mutual company to a stock company. (ASOP No. 37)

Individuals who are covered or may become covered under a retiree group benefits program by virtue of their relationship to an active or retired participant. (ASOP No. 6)

Any security that derives its value from an underlying financial instrument. Examples include interest rate swaps, futures, and options. (ASOP No. 7)

The insurer’s principles or objectives for determining NGEs. For example, the determination policy could include the insurer’s governing principles and requirements, profitability objectives, capital requirements, guidelines for drafting product provisions, and requirements for and frequency of reviews of NGEs on in-force products.

A reserve calculated under a defined scenario and a single set of assumptions in accordance with section 4 of VM-20.

A reserve calculated under a defined scenario and a single set of assumptions. (Principle-Based Reserves for Life Products)

An estimation technique under which historical claim data, such as the number and amount of claims for the subject block of business, are grouped into the time periods in which claims were incurred and the time periods in which they were processed. The processing date is typically the date the claim is received, adjudicated, or paid by the claim payer. The development method uses these groupings to create a claims processing or development pattern, which is used to help estimate the unprocessed portion of incurred claims. (ASOP No. 5 Revision – Incurred Health and Disability Claims)

A method under which historical claim data, such as the number and amount of claims for the subject block of business, are grouped into the time periods in which claims were incurred and the time periods in which they were processed. The processing date is typically the date the claim is received, adjudicated, or paid by the claim payer. The method uses these groupings to create a claims processing or development pattern, which is used to help estimate the unprocessed portion of incurred claims. (ASOP No. 5)

The act of departing from the guidance of an ASOP. (ASOP No. 1)

Services (for example, lab or radiology) provided to determine whether a medical condition exists. Having these services performed does not by itself indicate a condition exists, although the result of the test may indicate it does. (ASOP No. 45)

A present or prospective client who has the opportunity to select the actuary and is able to communicate directly with the actuary about the actuary’s qualifications, work, or recommendations. (ASOP No. 34)

A scale of nonguaranteed elements, certified annually by the illustration actuary, constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience and that satisfies the requirements set forth in the Model.

The rate used to discount projected cash flow to determine their present value. (ASOP No. 8)

The actuary’s estimate of the present value of a cash flow.

The actuary’s estimate of the present value of the claim estimate.

The actuary’s estimate of the present value of the unpaid claim estimate. (ASOP No. 20)

Hospitals that serve a large number of Medicaid or uninsured patients may be considered disproportionate share hospitals and may be eligible to receive additional payments under Medicaid. These payments may be subject to a hospital-specific limit. An annual allotment to each state limits Federal financial participation. Section 1923(i) of the Social Security Act requires direct payment of DSH payments and prohibits DSH payments made by MCOs. (Medicaid Managed-Care Capitation – Rate Development and Certification)

Amounts that an insurance business can distribute while retaining the level of capital required to support its ongoing operations. Distributable earnings consist of earnings of an insurance business computed using the applicable regulatory accounting basis, adjusted to allow for the injection or release of regulatory capital and surplus, in recognition of appropriate capital and surplus levels needed to support the ongoing operations. A regulatory accounting basis is the basis required by the insurance supervisory authority in a particular jurisdiction to be used for financial statement filings by insurance companies and similar entities in that jurisdiction. (ASOP No. 19)

Given the dividend framework, the process by which the divisible surplus is allocated to policies including the determination of dividend factors. (ASOP No. 15)

A group of policies for which dividends are determined by using the same value or set of values for a particular dividend factor. (ASOP No. 15)

A value or set of values, other than the policy factors, used in the determination of the dividend on a particular policy. A dividend factor reflects the experience of the dividend factor class of policies to which the particular policy belongs. Examples of dividend factors include those related to mortality, morbidity, expense, investment income, policy termination, tax, and experience premiums. (ASOP No. 15)

The structure by which the insurer allocates divisible surplus among participating policies. This includes the assignment of policies to dividend factor classes, the method of allocating income and costs, and the structure of the formulas or other methods of using dividend factors. (ASOP No. 15)

The aggregate amount available to be distributed to policyholders as dividends. (ASOP No. 15)

Prenuptial, postnuptial, separation, divorce, and support agreements, and other domestic relations proceedings. (ASOP No. 34)

Federal, state, and local statutes, regulations, case law, and other binding authority that may govern the domestic relations action, the retirement plan or plans, or any other aspect of the actuary’s engagement. (ASOP No. 34 Revision)

A court order dividing retirement plan benefits between the covered party and spouse. (ASOP No. 34)

An asset representing the unamortized portion of policy acquisition expenses. (ASOP No. 10)

Hospitals that serve a large number of Medicaid or uninsured patients may be considered disproportionate share hospitals and may be eligible to receive additional payments under Medicaid. These payments may be subject to a hospital-specific limit. An annual allotment to each state limits Federal financial participation. Section 1923(i) of the Social Security Act requires direct payment of DSH payments and prohibits DSH payments made by MCOs. (Medicaid Managed-Care Capitation – Rate Development and Certification)

An asset representing the unamortized portion of sales inducements to policyholders. (ASOP No. 10)

The length of time, measured in years, since a life expectancy estimate was issued. (ASOP No. 48)

The use of assumptions that are non-stochastic, but vary in response to scenario variations in stochastic assumptions. An example is the use of lapse rates that are a function of relative competitive position that can vary according to the interest rate scenario. (Standards for Life-Insurance Required Capital Levels)