STATUTORY STATUTORY STATEMENTS OF STATEMENTS OF

ACTUARIAL OPINION – ACTUARIAL OPINION –

Changes for Today and Changes for Today and TomorrowTomorrow

Tomorrow’s Model LawTomorrow’s Model Law

2003 CLRS Chicago, IL2003 CLRS Chicago, IL

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NAIC’S Property & Casualty NAIC’S Property & Casualty Actuarial Opinion Model LawActuarial Opinion Model Law

What does it do?What does it do?

Why?Why?

When is it effective?When is it effective?

Who did it?Who did it?

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Model Law -What it doesModel Law -What it does

Creates an Actuarial Report Summary Creates an Actuarial Report Summary document to be submitted March 15.document to be submitted March 15.

Provides legal protection to the appointed Provides legal protection to the appointed actuaryactuary

Protects the confidentiality of material in Protects the confidentiality of material in both the Actuarial Report and the Actuarial both the Actuarial Report and the Actuarial Summary.Summary.

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Actuarial Opinion SummaryActuarial Opinion SummarySection 2 B 1.Section 2 B 1.

““Every property and casualty insurance company Every property and casualty insurance company domiciled in this state that is required to submit a domiciled in this state that is required to submit a Statement of Actuarial Opinion shall annually Statement of Actuarial Opinion shall annually submit an Actuarial Opinion Summary, written by submit an Actuarial Opinion Summary, written by the company’s Appointed Actuary. This Actuarial the company’s Appointed Actuary. This Actuarial Opinion Summary shall be filed in accordance with Opinion Summary shall be filed in accordance with the appropriate NAIC Property and Casualty the appropriate NAIC Property and Casualty Annual Statement Instructions and shall be Annual Statement Instructions and shall be considered as a document supporting the Actuarial considered as a document supporting the Actuarial Opinion required in Subsection A.”Opinion required in Subsection A.”

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Actuarial Opinion SummaryActuarial Opinion SummaryContentsContents

The Summary must provide information on The Summary must provide information on the opining actuary’s best estimate and/ or the opining actuary’s best estimate and/ or range of reasonable estimates.range of reasonable estimates.

The Summary must include additional The Summary must include additional information as required by the Annual information as required by the Annual Statement Instructions.Statement Instructions.

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Actuarial Opinion SummaryActuarial Opinion Summary

““A company licensed but not domiciled in this A company licensed but not domiciled in this state shall provide the Actuarial Opinion state shall provide the Actuarial Opinion Summary upon request.” Section 2. B. 2.Summary upon request.” Section 2. B. 2.

Normally the domiciliary state will be the only Normally the domiciliary state will be the only state needing the AOS, but sometimes the state state needing the AOS, but sometimes the state needs to review the foreign parent company of needs to review the foreign parent company of one of its domesticsone of its domestics. .

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Actuarial Report and Actuarial Report and WorkpapersWorkpapers

This law also reinforces the need for the company to This law also reinforces the need for the company to file an Actuarial Opinion and for the actuary to file an Actuarial Opinion and for the actuary to prepare an Actuarial Report and Workpapers.prepare an Actuarial Report and Workpapers.

If the company fails to provide the Report at the If the company fails to provide the Report at the request of the Commissioner, the Commissioner request of the Commissioner, the Commissioner may engage a qualified actuary at the expense of the may engage a qualified actuary at the expense of the company to prepare a supporting Actuarial Report company to prepare a supporting Actuarial Report and/or Workpapers.and/or Workpapers.

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Legal ProtectionLegal Protection

““The Appointed Actuary shall not be liable The Appointed Actuary shall not be liable for damages to any person (other than the for damages to any person (other than the insurance company and the commissioner) insurance company and the commissioner) for any act, error, omission, decision or for any act, error, omission, decision or conduct with respect to the actuary’s opinion, conduct with respect to the actuary’s opinion, except in cases of fraud or willful misconduct except in cases of fraud or willful misconduct on the part of the Appointed Actuary.” on the part of the Appointed Actuary.”

Section 2. D.Section 2. D.

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ConfidentialityConfidentiality

The Statement of Actuarial Opinion is a The Statement of Actuarial Opinion is a public document.public document.

The Actuarial Opinion Summary and the The Actuarial Opinion Summary and the supporting Actuarial Report and Workpapers supporting Actuarial Report and Workpapers are confidential.are confidential.

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ConfidentialityConfidentiality ““Documents, materials or other information in the Documents, materials or other information in the

possession or control of the Department of possession or control of the Department of Insurance that are considered an Actuarial Report, Insurance that are considered an Actuarial Report, workpapers or Actuarial Opinion Summary workpapers or Actuarial Opinion Summary provided in support of the opinion, and any other provided in support of the opinion, and any other material provided by the company to the material provided by the company to the commissioner in connection with the Actuarial commissioner in connection with the Actuarial Report, workpapers or Actuarial Opinion Summary, Report, workpapers or Actuarial Opinion Summary, shall be confidential by law and privileged, shall not shall be confidential by law and privileged, shall not be subject to freedom of information, shall not be be subject to freedom of information, shall not be subject to subpoena, and shall not be subject to subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private discovery or admissible in evidence in any private civil action.” Section 3. B.civil action.” Section 3. B.

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ConfidentialityConfidentiality((continued)continued)

The documents may be released to the The documents may be released to the Actuarial Board for Counseling and Actuarial Board for Counseling and Discipline (ABCD) for the purpose of Discipline (ABCD) for the purpose of professional disciplinary proceedings if the professional disciplinary proceedings if the ABCD can preserve the confidentiality of the ABCD can preserve the confidentiality of the documentsdocuments..

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ConfidentialityConfidentialityExceptionsExceptions

The commissioner: The commissioner: “May share documents, materials or other information, “May share documents, materials or other information, including the confidential and privileged documents, including the confidential and privileged documents, materials or information subject to Subsection B with other materials or information subject to Subsection B with other state, federal and international regulatory agencies, with the state, federal and international regulatory agencies, with the National Association of Insurance Commissioners and its National Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal and affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and recipient agrees to maintain the confidentiality and privileged status of the document, material or other privileged status of the document, material or other information and has the legal authority to maintain information and has the legal authority to maintain confidentiality”confidentiality”

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Why do we need it?Why do we need it?

With the AOS, regulators can detect companies in need of With the AOS, regulators can detect companies in need of further investigation in a more timely manner.further investigation in a more timely manner.

AOS filed shortly after the Annual Statement and Actuarial Opinion AOS filed shortly after the Annual Statement and Actuarial Opinion are filed.are filed.

May pre-empt the need for requesting the Actuarial Report May pre-empt the need for requesting the Actuarial Report before it’s due date of May 1.before it’s due date of May 1.

Law will protect confidentiality of the AOS and the Law will protect confidentiality of the AOS and the Actuarial Report and Workpapers.Actuarial Report and Workpapers.

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When is it effective?When is it effective?

Passed the NAIC Casualty Actuarial Task Force in Passed the NAIC Casualty Actuarial Task Force in June 2003.June 2003.

Must be ratified by parent committees at NAIC in Must be ratified by parent committees at NAIC in September.September.

States must take legislative action to pass a law or States must take legislative action to pass a law or the commissioner may pass a regulation. the commissioner may pass a regulation.

Earliest date would be for 2005 Annual Statement.Earliest date would be for 2005 Annual Statement.

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Who did it?Who did it?

The Actuarial Opinions Instruction Working Group The Actuarial Opinions Instruction Working Group of the Casualty Actuarial Task Force.of the Casualty Actuarial Task Force.

Richard Marcks of CT – ChairRichard Marcks of CT – Chair

Actuaries from the Insurance Departments of Actuaries from the Insurance Departments of California, Illinois, Ohio, Pennsylvania and Texas.California, Illinois, Ohio, Pennsylvania and Texas.

Proposed by Texas in May of 2002.Proposed by Texas in May of 2002.

Input from the AAA and interested parties.Input from the AAA and interested parties.

Model LawModel Law

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