Loss Reserve Opinion Requirements

Significant changes in the scope and working of loss reserve opinions were adopted by the NAIC for 1991. Of most importance, the scope of the opinion was expanded to address direct and assumed reserves as well as net reserves. Additional requirements included commentary upon relevant topics affecting reserves including discounting, salvage/subrogation, financial reinsurance, loss portfolio transfers, reinsurance recoverability, and exceptional values under NAIC IRIS tests. For 1992, NAIC requirements have expanded to include the concept of an “appointed actuary”. Additionally, in lieu of work papers, a formal actuarial report must be prepared and provided to companies. This session covers two general areas. First, a review of the problems, pitfalls and successes experienced in satisfying the expanded 1991 requirements will be presented. The focus will be on an overall evaluation of the process. Particular attention will be attached to the issue of opining on direct and assumed reserves. The perspective will be from both company or consulting actuary and regulatory points of view. Second, this session will describe new requirements in place for 1992. The definition of the appointed actuary and what the concept implies for companies will be presented. Emphasis will be upon the practical aspects and requirements for 1992. Finally, standards for actuarial reports will be discussed and how these will affect the actuary’s work product.