NAIC Moves On Actuarial Opinion Change

The Task Force also voted to require opinion writers to include language in their opinions stating whether or not an actuary "reasonably believes" there is a "significant risk" of material adverse deviation in the items they opine on.

The final language added the word "reasonably" modifying the word "believes" to proposed instructions that had been the subject of opposition by the National Association of Independent Insurers and a public policy organization for actuaries.

Andrea Sweeny, who chairs the Committee on Property and Liability Financial Reporting for the Washington-based American Academy of Actuaries, said COPLFR still has some concerns with the requirement. "Stating that there is no significant risk of material deviation, almost sounds like a guarantee," she said.

Ms. Sweeny said actuaries will be moved to clog their opinions with a lot of language explaining the possibilities for deviation, obscuring the true disclosure purpose of the opinion.

According to John Purple, who chairs the CATF's Actuarial Opinion Instructions Working Group, the final vote was taken June 20 during a conference call. The changes now move forward to the NAIC's Blanks Task Force, he said.

If the Blanks Task Force votes to approve the revised instruction in October, Mr. Purple said the new rules would take effect for 2004 year-end statements.

Mr. Purple also confirmed that CATF voted to remove a final proposed item that had been opposed by the Des Plaines, Ill.-based NAII and COPLFR?a data certification requirement.

The data certification would have required that a statement by an insurance company officer be attached to every actuarial opinion, certifying that the data that an actuary relied on for his or her analysis contained "no material inaccuracies."

"We listened to the concerns of the American Academy of Actuaries" on that issue, Mr. Purple said. It sounded like a lot of work would be required to get that whole process completed, especially for large insurance groups, he said.

He also said that CATF came to the conclusion that this was "more of an audit issue than an actuarial opinion's instruction issue," and that different a group would study the audit issues.

The opinion instructions to be considered by the Blanks Task Force will require only that the opining actuary disclose the name of the company officer he or she relied upon for data in his or her opinion.

Opinions are filed with insurer annual statements in March of each year. The deadline for preparing supporting reports, which must be presented to a company's board of directors and are available for regulatory examination, is May 1.