Valuation Boot Camp Session 1D: ASOPs and Actuarial Opinion Presenter: Nancy J. Hubler, ASA, MAAA

Transcription

1 Valuation Boot Camp Session 1D: ASOPs and Actuarial Opinion Presenter: Nancy J. Hubler, ASA, MAAA Antitrust Disclaimer Presentation Disclaimer

2 Valuation Boot Camp for Health Actuaries SESSION 1D Nancy Hubler November 14, 2016

3 Applicable Actuarial Standards of Practice (ASOPs) AAA Applicability Guidelines To discuss today: ASOP 1 Introductory Actuarial Standard of Practice ASOP 5 Incurred Health and Disability Claims ASOP 7 Analysis of Cash Flows ASOP 11 Reinsurance ASOP 22 Statements of Opinion Based on Asset Adequacy Analysis ASOP 23 Data Quality ASOP 28 Statement of Actuarial Opinion Regarding Health Insurance Liabilities and Assets ASOP 41 Actuarial Communications ASOP 42 Determining Health and Disability Liabilities for Other Than Incurred Claims ASOP The Use of Health Status Based Risk Adjustment Methodologies 2

4 ASOP 1 - Introductory Actuarial Standard of Practice Standards define an appropriate level of practice Must vs. Should vs. May Material ASOPs identify what should be considered, done, documented and disclosed ASOPs are principles-based not prescriptive 3

5 ASOP 5 - Incurred Health and Disability Claims Considerations for estimating Incurred Claims(3.2) Plan provisions and business practices (3.2.1) Economic influences (3.2.2) Claims administration (3.2.3) Unpaid claims liability (3.3.1) Categories of incurred claims (3.3.2) 4

6 ASOP 5 - Incurred Health and Disability Claims Reinsurance (3.3.3) Large claim patterns (3.3.4) COB/Subrogation (3.3.5) Provider contractual arrangements (3.3.6) Methods of estimating incurred claims (3.5) Follow-up studies (3.6) Communication and Disclosures Documentation (4.1) methods, assumptions, procedures and sources Reliance on others (4.2.b) Deviation from standard (4.2.c) 5

7 ASOP 23 Data Quality Purpose is to give guidance to the actuary in Selecting the data that underlie the actuarial work product Relying on others who are providing data Reviewing these data for appropriateness, reasonableness, and comprehensiveness Making appropriate disclosures. 6

8 Definitions 2.1 Appropriate Data 2.3 Comprehensive Data 2.4 Data 2.6 Practical 7

9 Analysis of issues and recommended practices 3.2 Selection of data Consider desired data elements Select data considering the following: Appropriateness for intended purpose Reasonableness and comprehensiveness Known material limitations Cost and feasibility 3.3 Reliance on data supplied by others Accuracy and comprehensiveness are responsibility of others Review data, as discussed in 3.5 Disclose reliance 8

10 Analysis of issues and recommended practices 3.5 Review of data Reasonableness and consistency Data definitions Questionable data values Review prior data 3.6 Limitation of the actuary s responsibility 3.7 Use of data 3.8 Documentation 9

11 Communications and Disclosures 4.1 Communication and disclosure 4.1(a) Source of data 4.1(c) Reliance on others 4.1(j) Deviation from standard 10

12 ASOP 28 Statements of Actuarial Opinion Regarding Health Insurance Liabilities and Assets Purpose provide guidance to actuaries issuing a written statement of actuarial opinion regarding health insurance liabilities and assets Scope includes Opinion to comply with NAIC Health Annual Statement instructions Opinion otherwise prescribed by law or regulation Statement to fulfill contractual obligations of the principal Statement represented by the actuary to be in compliance with the standard 11

13 Definitions 2.3 Contract reserve 2.7 Loss adjustment expense 2.8 Moderately adverse conditions 2.9 Qualified actuary 2.10 Provision for adverse deviation 12

14 Recommended practices 3.1 Legal, regulatory and contractual requirements 3.2 Purpose of statement of opinion 3.6 Materiality 3.7 Liability and asset valuation Within a reasonable range Affect of contract provisions Good and sufficient provision Reliance on others 3.11 Types of opinions 13

15 ASOP 41--Communications Purpose This actuarial standard of practice (ASOP) provides guidance to actuaries with respect to written, electronic, or oral actuarial communications 14

16 Definitions 2.1 Actuarial communication 2.4 Actuarial report 2.5 Actuarial services 2.7 Intended user 2.9 Other user 15

17 Recommended Practices 3.1 Requirements for Actuarial Communications Form and Content Clarity Identification of Responsible Actuary 3.4 Disclosures Within an Actuarial Report Uncertainty or Risk Conflict of Interest Reliance on Other Sources Responsibility for Assumptions and Methods Subsequent Events 3.7 Responsibility to Other Users 16

18 Communications and Disclosures 4.1 Disclosures in any Actuarial Communication Identification of Responsible Actuary Disclosures in Actuarial Reports 17

19 ASOP 42 Determining Health and Disability Liabilities other than Liabilities for Incurred Claims General considerations (3.2) Contract reserves (3.3) Premium deficiency reserves (3.4) Provider related liabilities (3.5) Claim adjustment expense (3.6) Other liabilities (3.7) Follow-up studies (3.8) Margin for uncertainty (3.9) 18

20 ASOP 42 Determining Health and Disability Liabilities other than Liabilities for Incurred Claims General considerations (3.2) Health Benefit Plan Provisions and Business Practices Risk-Sharing Arrangement Provisions Economic Influences Risk Characteristics and Organizational Practices by Block of Business Legislative Requirements 19

21 ASOP 42 Determining Health and Disability Liabilities other than Liabilities for Incurred Claims General considerations (3.2) continued Carve-Outs Special Considerations for Long-Term Products Reinsurance Arrangements Expenses Consistency of Bases 20

22 ASOP 42 Determining Health and Disability Liabilities other than Liabilities for Incurred Claims Contract reserves (3.3) Premium deficiency reserves (3.4) Provider related liabilities (3.5) Claim adjustment expense (3.6) Other liabilities (3.7) Follow-up studies (3.8) Margin for uncertainty (3.9) 21