Session 46, Streamlining Actuarial Reporting. Moderator: Thomas A. Campbell, FSA, MAAA, CERA

Transcription

1 Session 46, Streamlining Actuarial Reporting Moderator: Thomas A. Campbell, FSA, MAAA, CERA Presenter: Laura Alden Hanson, ASA, MAAA Lorne W. Schinbein, FSA, MAAA

2 2016 Valuation Actuary Symposium Streamlining Actuarial Reporting August 30, 2016 Tom Campbell Laura Hanson Lorne Schinbein

3 Presentation Disclaimer Presentations are intended for educational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Society of Actuaries, its cosponsors or its committees. The Society of Actuaries does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented. Attendees should note that the sessions are audio-recorded and may be published in various media, including print, audio and video formats without further notice. 2

4 Introductions Moderator Tom Campbell, FSA, MAAA, CERA Senior Consulting Actuary Actuarial Resources Corporation Presenters Laura Hanson, ASA, MAAA Senior Corporate Actuary Allianz Life Insurance Company of North America Lorne Schinbein, FSA, MAAA VP & Consulting Actuary Actuarial Resources Corporation of Georgia 3

5 Introduction Project Overview Phase 1: Design a Streamlined Template Phase 2: Pilot with Companies and Regulators Case study and lessons learned Recommendations and Next Steps 4

6 Project Overview 5

7 Current State Companies file multiple standalone actuarial reports each year Repetition leads to inefficiencies and potential errors High review effort for regulatory actuaries NAIC initiated a streamlining project in

8 Future State NAIC hired Actuarial Resources Corporation Phase 1 and Phase 2 Streamline actuarial reports Potential Later Phases Add electronic data capture Provide a single entry point to access reports 7

9 Phase 1: Design a Streamlined Template 8

10 Development Process Actuarial Resources Corporation: NAIC identified 19 actuarial reports for the project Reviewed actuarial reports for a sample size of life insurers (10) Identified the necessary data and information points to cover multiple types of products in a streamlined actuarial report Designed a proposed actuarial report which facilitated electronic data capture Presented to the NAIC Life Actuarial Task Force (LATF) recommendations for a Standard Reporting Template 9

11 Overview - Standard Reporting Template Combination of New Summary and NAIC Required Reports New Summary Reports Existing required opinions and certifications Existing required memoranda and reports Collectively referred to as Template Reports Data & Information Points Prototype for electronic capture of important summary issues 10

12 Overview - Standard Reporting Template In addition... Template promotes electronic links and reference points Allows the reviewer to move among the Template Reports Allows information that previously was duplicated in the reports to be provided once, at a summary level Template makes no changes to current NAIC opinion/certification requirements 11

13 Current NAIC Opinions/Certifications (19) 1. Actuarial Opinion (Model 822) 2. Actuarial Memorandum (Model 822) 3. Regulatory Asset Adequacy Issues Summary (Model 822) 4. Exhibit 5 Interrogatories Participating Products 5. Exhibit 5 Interrogatories Non-Guaranteed Elements 6. AG 35 (EIA) certification 7. AG 36 (IUL) certification 8. AG 38 various reports 9. AG 43 certifications and memorandum 10. C-3 Phase 1 certification and memorandum 12

14 Current NAIC Opinions/Certifications (cont.) 11. C-3 Phase 2 certifications and memorandum 12. Guaranteed Separate Accounts (Model 200) - opinion and memorandum 13. Life Illustrations (Model 582) certifications 14. Modified Guaranteed Annuities (Model 255) opinion 15. Preferred Mortality (Model 815) certification and report 16. State Specific Requirements 17. Synthetic GICs (Model 695) opinion and memorandum 18. Regulation XXX X-factors (Model 830) opinion and report 19. Annuity Nonforfeiture (Model 806) certification for indexed annuities 13

15 Data & Information Points Identify any qualified opinions/certifications Additional reserves needed to assure non-qualified opinions/certifications Significant changes to reserve bases in the past year Significant changes made to assumptions, methodology or scenarios from prior year Other changes made from the prior year Significant subsequent events 14

16 Data & Information Points Details on data/model validation Assumption setting limited to lapses, mortality, and utilization of guaranteed benefits Results for specific scenarios, such as the NY7 Key risks associated with the business Sensitivity tests for the key risks Exhibit 5 Interrogatories 15

17 Package Submitter ARC developed a Package Submitter Program to assemble the Reports Checklist Report (Table of Contents) Four Summary Reports (minimize duplication of info.) 1. Appointed Actuary Report 2. Product Description and Reserve Basis Report 3. Liability Assumption Report 4. Risk Report 16

18 Package Submitter 17

19 Package Submitter 18

20 Phase 2: Pilot with Companies and Regulators 19

21 Project Pilot Six of the ten participating companies submitted 2015 reports to regulators using new template and package submitter Represented six of nine participating states Some companies first completed submission under current state, then submitted second set of documents using new template and Package Submitter Reports also submitted on an informational basis to ARC 20

22 Case Study: Allianz Life Assigned one person to coordinate entire process Managed asset adequacy testing process Converted memos to new format Identified and gathered new information needed Identified and removed extraneous information This person was new to asset adequacy testing and did not perform any modeling Fresh look and separation was important Reports were submitted to state regulator using new template, but not using package submitter due to technical difficulties 21

23 Allianz Feedback: Template Opportunity to take fresh look at our reports Identify our message Present lines of business consistently Remove extraneous information not directly related to asset adequacy testing Template did not 100% fit our reporting needs so we made some adjustments Smaller reports are easier to draft and review internally Less duplication reduces future workload Leverage streamlined reports for additional purposes 22

24 Allianz Feedback: Package Submitter Package submitter should be called package compiler Converts Word documents into PDF documents and compiles them into one zip folder Preserves inter-document links Does not submit documents to regulators (e.g., SERFF) Complications arise when wet signature used We prefer not to use 23

25 Additional Company Feedback Most liked smaller reports vs. one big memo Many found they discovered areas for improvement as a result of the process (both testing and drafting) Many said it is easier to find information, which will be especially useful under PBR with higher data volume Many expect the process to go smoother going forward Some recommended changes to template Some liked the package submitter and its checklist report Some liked the links, while others thought they would take time to get used to 24

26 Regulator Feedback General appreciation for the template organization Represents change for experienced regulators accustomed to their companies memos Request for guidance what order to follow when reviewing multiple documents 25

27 Recommendations and Next Steps 26

28 Template Recommendations Should Template be Optional or Required? Optional, at least initially Decision to use the Template should be mutual between the company and the domestic regulator How can Template be improved? Update Instructions Add an Asset Portfolio and Assumption Report Allow flexibility in combining summary reports Data and Information Points will be a separate document 27

29 Package Submitter Recommendations Should the Package Submitter (PS) be optional? Using the PS will be optional Future use of PS will require ongoing support from NAIC staff or vendor Links as Bookmarks or Headers? Flexibility was added to allow the company to retain either when converting Word documents to PDFs 28

30 Next Steps: ARC Finalize Template framework and Instructions Present to LATF and Interested Parties Respond to this review by LATF and Interested Parties 29

31 Next Steps: Regulators LATF needs to address these additional issues Are Summary Reports (as revised) sufficient? Are the Template Reports sufficient? Are the Data and Information Points sufficient? Should the Summary Reports be signed? How to codify the Streamlining process? 30

32 Next Steps: Companies If interested in participating: Contact ARC to obtain instructions and package submitter Contact regulator to obtain approval to go forward 31

33 Thank you. Questions? 32