Glossary

Adjustment to observed deaths in a given time period to account for deaths that have occurred but have not been reported due to the time lag in reporting systems or errors and incomplete information available from reporting sources regarding deaths. (ASOP No. 48)

A transfer of public funds between governmental entities (for example, county government to state government or state university hospital to state Medicaid agency). (Medicaid Managed-Care Capitation – Rate Development and Certification)

A scale of nonguaranteed elements currently being illustrated that is not more favorable to the policyholder than the lesser of the disciplined current scale or the currently payable scale.

An actuary who is appointed in accordance with the requirements set forth in the Model.

An actuarial cost method under which actuarial gains and losses are included as part of the unfunded actuarial accrued liability of the pension plan, rather than as part of the normal cost of the plan.

A mortality assumption that has been adjusted for impairments. (ASOP No. 48)

A health factor or condition that tends to increase an insured’s probability of death. (ASOP No. 48)

An executable form of the model. Examples of implementation may include, but not be limited to, a computer program, database, spreadsheet or any combination thereof. (Modeling)

A bonus payment to a provider, typically used to motivate efficiency or quality in patient care management, or to encourage retention of providers in a network. (ASOP No. 42)

The date a claim is determined to be a liability of the organization in accordance with the terms of the health benefit plan. For health benefit plans where the claim must exceed a minimum threshold, for example where there is a deductible or elimination period, the incurral date may be the date claims begin to accumulate toward the threshold. (ASOP No. 5)

Adjustment to observed deaths in a given time period to account for deaths that have occurred but have not been reported due to the time lag in reporting systems or errors and incomplete information available from reporting sources regarding deaths. (ASOP No. 48)

A death that has taken place, whether known or not known. (Exposure Draft, Proposed ASOP Life Settlements Mortality)

A death occurring during a period of exposure being analyzed, whether reported during that period or not. (ASOP No. 48)

Living quarters designed for residents capable of living independently. A resident could receive home health care in the independent living unit, but a resident who needs full-time health care on either a temporary or permanent basis is normally transferred to the health center.

Life and health insurance policies under which the insurer is obligated to provide coverage for an extended period of time, and under which premiums may vary at the discretion of the insurer. (ASOP No. 10)

In this standard, the word refers both to individual life insurance and annuity contracts and to individual-type contracts issued under a “group” umbrella of any trust which does not have discretion to select the insurer(s) on behalf of all individual policyholders. (ASOP No. 1)

A method under which the actuarial present value of each increment of an individual’s projected benefits is allocated on a level basis over the future earnings or service of the individual between the age at which such increment is first recognized and the exit age(s). The portion of this actuarial present value allocated to a valuation year is called the normal cost. The actuarial value of assets is deemed to be assigned to individuals on a reasonable and consistent basis; for example, each individual’s share may be the accumulation of his or her prior normal costs and any prior actuarial gains (losses) allocated to the individual. Actuarial gains (losses) are allocated to individuals in proportion to the assigned actuarial value of assets, or on any other reasonable and consistent basis. The actuarial accrued liability for an individual equals the assigned portion of the actuarial value of assets. (ASOP No. 4)

A method under which the actuarial present value of each increment of an individual’s projected benefits is allocated on a level basis over the future earnings or service of the individual between the age at which such increment is first recognized and the exit age(s). The portion of this actuarial present value allocated to a valuation year is called the normal cost. Each individual’s portion of the actuarial accrued liability should be determined on a consistent basis, usually as the retrospective accumulation of the individual’s prior actuarial accrued liability and prior normal cost, using the valuation actuarial assumptions. (ASOP No. 4)

Any policy (or contract) that is defined as an individual policy under state insurance law or by the terms of the policy. Any certificate issued under any other policy that is sold to a passive trust but is marketed to individuals is also defined as an individual policy for purposes of this standard. (ASOP No. 33)

A method under which the actuarial present value of each increment of an individual’s projected benefits is allocated on a level basis over the future earnings or service of the individual between the age at which such increment is first recognized and the exit age(s). The portion of this actuarial present value allocated to a valuation year is called the normal cost. The actuarial value of assets is deemed to be assigned to individuals on a reasonable and consistent basis; for example, each individual’s share may be the accumulation of his or her prior normal costs and any prior actuarial gains (losses) allocated to the individual. Actuarial gains (losses) are allocated to individuals in proportion to the assigned actuarial value of assets, or on any other reasonable and consistent basis. The actuarial accrued liability for an individual equals the assigned portion of the actuarial value of assets. (ASOP No. 4)

General economic inflation, defined as price changes over the whole of the economy.

The date through which data and other information have been considered in setting assumptions.

The assets allocated to a closed block at its inception. The assets of the closed block may be either of the following: (a) a distinct segment of assets (which may contain either 100% or a specified fraction of each designated asset) associated exclusively with the closed block; or (b) a defined share of a larger segment of assets. Such larger segment may also contain assets associated with participating business sold after the date of conversion. Such defined share will vary from time to time according to the methodology specified in the operating rules. (ASOP No. 33)

The obligations ascribed to the closed block at its inception by the operating rules. (ASOP No. 33)

Assumptions, data, or parameters used in a model.

Functions, more complex than ADLs, that are used as measurement standards of functioning capacity; examples include preparing meals, managing medications, housekeeping, telephoning, shopping, and managing finances. (ASOP No. 18)

An enterprise involved in assuming insurance risk, such as one or any combination of the following:  an insurance company or health maintenance organization; a collection of policies or contracts in-force that cover insurance risk; and a distribution system that sells such policies or contracts. (ASOP No. 19)

Funds from premiums and miscellaneous (non-investment) income from insurance operations, and payments for losses, expenses, and policyholder dividends. Associated income taxes are recognized when the analysis is on a post-tax basis. (ASOP No. 30)

The extent to which the level or timing of actual insurance cash flows is likely to differ from expected insurance cash flows. (ASOP No. 30)

An individual whose life is covered by a life insurance policy. (ASOP No. 48)

An entity that accepts the risk of financial losses or, for a specified time period, guarantees stated benefits upon the occurrence of specific contingent events, in exchange for a monetary consideration.

The designer’s planned uses for the model. (Modeling)

The persons to whom an appraisal report is directed and with whom the actuary, after discussion with the principal, intends to communicate. Unless otherwise specifically agreed, the principal is always a member of the intended audience. In addition, other persons or organizations, such as investors or regulators, may be designated by the principal, with consent of the actuary, as members of the intended audience. (ASOP No. 19)

The intended application or the project’s objective or both, depending on the actuary’s role. The intended application applies if the actuary’s role includes designing, building, or developing the model. The project’s objective applies if the actuary’s role includes selecting or using the model in an actual project.

Any person who the actuary identifies as able to rely on the actuarial findings. (ASOP No. 41)

A transfer of public funds between governmental entities (for example, county government to state government or state university hospital to state Medicaid agency). (Medicaid Managed-Care Capitation – Rate Development and Certification)

Care needed for persons with stable conditions that require daily, but not 24- hour, nursing supervision. Intermediate nursing care is less specialized than skilled nursing care and often involves more custodial care. (ASOP No. 18)

A methodology used to calculate the additional assets necessary in excess of liabilities to withstand shocks based on an internal quantification of financial risk exposures using stochastic methods or deterministic proxies. An internal capital assessment may indicate capital levels that are higher or lower than levels specified by regulators or rating agencies.

All cash flows related to investment operations, including investment purchases, sales, income, and expenses.

As each is defined in SFAS No. 97, & 6-14. (ASOP No. 10)

Proceeds (other than the return of principal) derived from the investment of assets, minus investment expenses. Associated income taxes are recognized when the analysis is on a post-tax basis. (ASOP No. 30)

The income associated with the investment of insurance cash flows. (This is sometimes referred to as investment income on policyholder-supplied funds.) (ASOP No. 30)

Uncertainty surrounding the realization of a specified investment income stream. (ASOP No. 20)

The risk that investment yields will differ from expectations or assumptions, causing a change in the amount or timing of cash flows.

The risk that investment rates of return will differ from expectations or assumptions, causing a change in the amount or timing of asset, policy, or other liability cash flows. This has been commonly referred to in actuarial literature as the C-3 risk or asset/liability mismatch risk. (ASOP No. 7)