COPLFR

Question 1

SCOPE Identifies the reserve items upon which the Appointed Actuary is providing an opinion. These may include…?

Answer 1

1. L&LAE Reserves
2. Retroactive reinsurance assumed reserves
3. Unearned premium reserves for P&C Long Duration Contracts
4. Unearned premium reserves for extended reporting endorsements
5. Other reserve items for which the Appointed Actuary is providing an opinion

Question 2

The SCOPE of the SAO should identify the basis upon which the reserves are stated. This can include…?

Answer 2

1. Whether reserves are stated as being nominal or discounted and the discount rate
2. Whether the reserves are stated to include an explicit risk margin and the basis of that margin
3. Whether reserves are gross or net of specified recoverables
4. Whether the potential for uncollectible recoverables is considered in the reserves
5. The types of unpaid loss adjustment expenses covered by the reserve
6. When the opinion is only for a portion of a reserve, the claims exposure to be covered by the opinion (e.g. type of loss, line of business, year, state)
7. Any other items that are needed to describe the reserves sufficiently for the actuary’s evaluation of the reserves

Question 3

What are the key points regarding data in the SCOPE?

Answer 3

1. The review date
2. Provider (officer) of data relied upon by the Actuary
3. Evaluation of data for reasonableness and consistency
4. Reconciliation to Schedule P

Question 4

What are the steps taken when the data does not reconcile to Schedule P?

Answer 4

1. Confirm that the person responsible for the data is aware of the differences.
2. Recommend that the company inform its outside auditors of the unexplained differences
3. Discuss the situation in the SAO and elaborate on it in the Actuarial Report.