15 $1 Million 14 $500,000 13 $250,000 12 $100,000 11 $50,000 10 $25,000 9 $16,000 8 $8,000 7 $4,000 6 $2,000 5 $1,000 4 $500 3 $300 2 $200 1 $100
Precept 2 states that An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience and only when the Actuary satisfies applicable qualification standards. These standards must be promulgated by a Recognized Actuarial Organization. Which of the following is NOT a Recognized Actuarial Organization? CAS CIA A. B. AAA ABC C. D.
Which of the following is NOT a professionalism document for an actuary? Actuary's Guide to Insurance Code of Professional Conduct A. B. Actuarial Standards of Practice Statement of Principles C. D.
According to ASOP 17: Expert Testimony by Actuaries, “One who is qualified by knowledge, skill, experience, training, or education to render an opinion or otherwise testify concerning the matter at hand” is the definition of what? Principal Expert A. B. Advocate Scholar C. D.
According to Code of Conduct Precept 9, an Actuary shall not disclose to another party any Confidential Information unless authorized to do so by whom? Manager Principal A. B. Attorney CAS President C. D.
Insurance Commissioner Prescribed assumptions accordance with the law According to ASOP 41, if any material assumption or methods are prescribed by applicable law, the actuary should disclose the following EXCEPT for? Applicable Law Name of the Insurance Commissioner A. B. Prescribed assumptions or methods Report prepared in accordance with the law C. D.
Risk of Misinterpretation According to Precept 8 of the Code of Professional Conduct, an Actuary who performs Actuarial Services shall take reasonable steps to assure that such services are not used to mislead others. Which of the following risks are NOT mentioned in Precept 8? Risk of Misquotation Risk of Misinterpretation A. B. Risk of Other Misuse Risk of Misreading C. D.
According to ASOP 29: Expense Provisions in Property/Casualty Insurance Ratemaking, which of the following are included in taxes, licenses and fees? State premium taxes Federal income taxes A. B. Foreign income taxes Residual market provisions C. D.
Which of the following is NOT an actuarial consideration when establishing risk classes? Credibility Adverse selection/ homogeneity A. B. Industry practices Practicality C. D.
ASOP 29, Expense Provisions in Property/Casualty Insurance Ratemaking, contains a reference to which of the following ASOPs? ASOP 13, Trending Procedures In P/C Insurance Ratemaking ASOP 7, Analysis of Life, Health, or P/C Insurer Cash Flows A. B. ASOP 23, Data Quality ASOP 39, Treatment of Catastrophe Losses in P/C Ratemaking C. D.
According to ASOP 36: Statements of Actuarial Opinion, the actuary should only make use of another’s analyses or opinions when, in the actuary’s professional judgment, it is reasonable to do so. In making this determination, the actuary should consider all of the following EXCEPT: The credentials of the individual(s) that prepared the analyses or opinions. The nature of the exposure and coverage. A. B. Actuary’s opinion of the quality of the work in the other analyses or opinions. Reserves covered by another’s analyses or opinions in comparison to total reserves. C. D.
Homogeneity to historic Specific weather perils According to ASOP 39, Treatment of Catastrophe Losses in P/C Insurance Ratemaking, identification of catastrophic events includes which characteristic? Potential to display contagion Homogeneity to historic catastrophe losses A. B. Impact to multiple geographic regions Specific weather perils C. D.
According to ASOP 30- Treatment of Profit and Contingency Provisions and the Cost of Capital in Property/Casualty Insurance Ratemaking, "Cost of Capital" is also known as: Operations risk Opportunity cost A. B. Insurance risk Capital risk C. D.
According to ASOP 30 - Treatment of Profit and Contingency Provisions and the Cost of Capital in Property/Casualty Insurance Ratemaking, “Operating Profit” includes the following, EXCEPT: Underwriting Profit Miscellaneous (non-investment) income from Insurance Operations A. B. Investment income from Insurance Operations Net Real Estate Income C. D.
Which of the following terms is not defined in ASOP 1 (Intro to ASOPs Must Should A. B. May Could C. D.
When issuing actuarial communications incorporating catastrophe modeling (ASOP 38), disclose each of the following EXCEPT: User Input Actuary's Qualifications A. B. Adjustments to Results Reliance on Another Actuary C. D.
Instructions & answer slides follow End of Game Instructions & answer slides follow
Precept 2 states that An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience and only when the Actuary satisfies applicable qualification standards. These standards must be promulgated by a Recognized Actuarial Organization. Which of the following is NOT a Recognized Actuarial Organization? CAS CIA A. B. AAA ABC C. D.
Which of the following is NOT a professionalism document for an actuary? Actuary's guide to insurance Code of Professional Conduct A. B. Actuarial Standards of Practice Statement of Principles C. D.
According to ASOP 17: Expert Testimony by Actuaries, “One who is qualified by knowledge, skill, experience, training, or education to render an opinion or otherwise testify concerning the matter at hand” is the definition of what? Principal Expert A. B. Advocate Scholar C. D.
According to Code of Conduct Precept 9, an Actuary shall not disclose to another party any Confidential Information unless authorized to do so by whom? Manager Principal A. B. Attorney CAS President C. D.
Insurance Commissioner Prescribed assumptions accordance with the law According to ASOP 41, if any material assumption or methods are prescribed by applicable law, the actuary should disclose the following EXCEPT for? Applicable Law Name of the Insurance Commissioner A. B. Prescribed assumptions or methods Report prepared in accordance with the law C. D.
Risk of Misinterpretation According to Precept 8 of the Code of Professional Conduct, an Actuary who performs Actuarial Services shall take reasonable steps to assure that such services are not used to mislead others. Which of the following risks are NOT mentioned in Precept 8? Risk of Misquotation Risk of Misinterpretation A. B. Risk of Other Misuse Risk of Misreading C. D.
According to ASOP 29: Expense Provisions in Property/Casualty Insurance Ratemaking, which of the following are included in taxes, licenses and fees? State premium taxes Federal income taxes A. B. Foreign income taxes Residual market provisions C. D.
Which of the following is NOT an actuarial consideration when establishing risk classes? Credibility Adverse selection/ homogeneity A. B. Industry practices Practicality C. D.
ASOP 29, Expense Provisions in Property/Casualty Insurance Ratemaking, contains a reference to which of the following ASOPs? ASOP 13, Trending Procedures In P/C Insurance Ratemaking ASOP 7, Analysis of Life, Health, or P/C Insurer Cash Flows A. B. ASOP 23, Data Quality ASOP 39, Treatment of Catastrophe Losses in P/C Ratemaking C. D.
According to ASOP 36: Statements of Actuarial Opinion, the actuary should only make use of another’s analyses or opinions when, in the actuary’s professional judgment, it is reasonable to do so. In making this determination, the actuary should consider all of the following EXCEPT: The credentials of the individual(s) that prepared the analyses or opinions. The nature of the exposure and coverage. A. B. Actuary’s opinion of the quality of the work in the other analyses or opinions. Reserves covered by another’s analyses or opinions in comparison to total reserves. C. D.
Homogeneity to historic Specific weather perils According to ASOP 39, Treatment of Catastrophe Losses in P/C Insurance Ratemaking, identification of catastrophic events includes which characteristic? Potential to display contagion Homogeneity to historic catastrophe losses A. B. Impact to multiple geographic regions Specific weather perils C. D.
According to ASOP 30- Treatment of Profit and Contingency Provisions and the Cost of Capital in Property/Casualty Insurance Ratemaking, "Cost of Capital" is also known as: Operations risk Opportunity cost A. B. Insurance risk Capital risk C. D.
According to ASOP 30 - Treatment of Profit and Contingency Provisions and the Cost of Capital in Property/Casualty Insurance Ratemaking, “Operating Profit” includes the following, EXCEPT: Underwriting Profit Miscellaneous (non-investment) income from Insurance Operations A. B. Investment income from Insurance Operations Net Real Estate Income C. D.
Which of the following terms is not defined in ASOP 1 (Intro to ASOPs Must Should A. B. May Could C. D.
When issuing actuarial communications incorporating catastrophe modeling (ASOP 38), disclose each of the following EXCEPT: User Input Actuary's Qualifications A. B. Adjustments to Results Reliance on Another Actuary C. D.
50-50 Lifeline Slides
Precept 2 states that An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience and only when the Actuary satisfies applicable qualification standards. These standards must be promulgated by a Recognized Actuarial Organization. Which of the following is NOT a Recognized Actuarial Organization? A. B. AAA ABC C. D.
Actuary's guide to insurance Code of Professional Conduct Which of the following is NOT a professionalism document for an actuary? Actuary's guide to insurance Code of Professional Conduct A. B. C. D.
According to ASOP 17: Expert Testimony by Actuaries, “One who is qualified by knowledge, skill, experience, training, or education to render an opinion or otherwise testify concerning the matter at hand” is the definition of what? Expert A. B. Advocate C. D.
According to Code of Conduct Precept 9, an Actuary shall not disclose to another party any Confidential Information unless authorized to do so by whom? Principal A. B. Attorney C. D.
Insurance Commissioner Prescribed assumptions According to ASOP 41, if any material assumption or methods are prescribed by applicable law, the actuary should disclose the following EXCEPT for? Name of the Insurance Commissioner A. B. Prescribed assumptions or methods C. D.
According to Precept 8 of the Code of Professional Conduct, an Actuary who performs Actuarial Services shall take reasonable steps to assure that such services are not used to mislead others. Which of the following risks are NOT mentioned in Precept 8? Risk of Misquotation A. B. Risk of Misreading C. D.
According to ASOP 29: Expense Provisions in Property/Casualty Insurance Ratemaking, which of the following are included in taxes, licenses and fees? State premium taxes A. B. Residual market provisions C. D.
Which of the following is NOT an actuarial consideration when establishing risk classes? Credibility A. B. Industry practices C. D.
ASOP 13, Trending Procedures In P/C Insurance Ratemaking ASOP 29, Expense Provisions in Property/Casualty Insurance Ratemaking, contains a reference to which of the following ASOPs? ASOP 13, Trending Procedures In P/C Insurance Ratemaking A. B. ASOP 23, Data Quality C. D.
Actuary’s opinion of the quality According to ASOP 36: Statements of Actuarial Opinion, the actuary should only make use of another’s analyses or opinions when, in the actuary’s professional judgment, it is reasonable to do so. In making this determination, the actuary should consider all of the following EXCEPT: The nature of the exposure and coverage. A. B. Actuary’s opinion of the quality of the work in the other analyses or opinions. C. D.
Specific weather perils According to ASOP 39, Treatment of Catastrophe Losses in P/C Insurance Ratemaking, identification of catastrophic events includes which characteristic? Potential to display contagion A. B. Specific weather perils C. D.
According to ASOP 30- Treatment of Profit and Contingency Provisions and the Cost of Capital in Property/Casualty Insurance Ratemaking, "Cost of Capital" is also known as: Operations risk Opportunity cost A. B. C. D.
According to ASOP 30 - Treatment of Profit and Contingency Provisions and the Cost of Capital in Property/Casualty Insurance Ratemaking, “Operating Profit” includes the following, EXCEPT: Underwriting Profit A. B. Net Real Estate Income C. D.
Which of the following terms is not defined in ASOP 1 (Intro to ASOPs Should A. B. Could C. D.
When issuing actuarial communications incorporating catastrophe modeling (ASOP 38), disclose each of the following EXCEPT: User Input Actuary's Qualifications A. B. C. D.
$100
$200 Radon Reduction Level
$300 Radon Reduction Level
$500 Radon Reduction Level
$1,000 Radon Reduction Level
$2,000 Radon Reduction Level
$4,000 Radon Reduction Level
$8,000 Radon Reduction Level
$16,000 Radon Reduction Level
$25,000 Radon Reduction Level
$50,000 Radon Reduction Level
$100,000 Radon Reduction Level
$250,000 Radon Reduction Level
$500,000
$1 Million Radon Reduction Level
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Professional Guidance Precept 2 of the Code of Conduct: An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience and only when the Actuary satisfies applicable qualification standards. The continuing education and qualification standards outline what is required of an actuary. One issue that is of recent debate is what happens when an actuary moves to a new area (pricing to reserving or Life to P&C or one specialized product to another.) Recognized Actuarial Organization – an organization that has been accepted for full membership in the International Actuarial Association or a standards setting, counseling or discipline body to which authority has been delegated by such an organization.
Professional Guidance Code of Professional Conduct Identifies the professional and ethical standards required of actuaries who practice in the United States. Actuarial Standards of Practice (ASOP) Provide guidance on the techniques, applications, procedures, and methods that reflect appropriate actuarial practices in the United States Statements of Principle (SOP) Provide a conceptual foundation for common actuarial applications and assist where actuarial concepts are evolving, adapting to practical needs, or incorporating advances in actuarial practice, actuarial science or in other disciplines relevant to the work of actuaries.
Professional Guidance ASOP 17 – Expert Testimony by Actuaries Focus is on preparation and delivery of sound expert testimony by actuaries Applies to actuaries testifying as actuarial experts or communicating an actuarial opinion in a public forum 2.5 Expert—One who is qualified by knowledge, skill, experience, training, or education to render an opinion or otherwise testify concerning the matter at hand. 2.7 Principal—A client or employer of the actuary. Section 1 of the standard discusses its purpose and scope. Its focus is on the preparation and delivery of sound expert testimony by actuaries. It is meant to provide guidance to the actuary. It applies to actuaries testifying as experts or communicating an actuarial opinion in a public forum. Some examples of these public forums might include administrative hearings, arbitrations, committee hearings, and court proceedings such as depositions, declarations, and affidavits. Nothing in this standard is intended to discourage reasonable differences of actuarial opinion, or to inhibit responsible creativity in advancing the practice of actuarial science. This standard became effective April 15, 1991.
Professional Guidance Precept 9 of the Code of Conduct: An Actuary shall not disclose to another party any Confidential Information unless authorized to do so by the Principal or required to do so by Law. Definition: Confidential Information Information not in the public domain of which an Actuary becomes aware as a result of providing Actuarial Services to a Principal.
Professional Guidance ASOP 41 – Actuarial Communications 4.2 Certain Assumptions or Methods Prescribed by Law—Where any material assumption or method was prescribed by applicable law, the actuary should disclose the following in the actuarial the applicable law under which the report was prepared; the assumptions or methods that are prescribed by the applicable law; and that the report was prepared in accordance with the applicable law If the actuarial report is in a prescribed form that does not accommodate these disclosures, the actuary should make these disclosures in a separate communication (such as a cover letter to the principal), requesting that both communications be disseminated together where practicable. This section of ASOP 41 is referenced in many other ASOPs which may be impacted by methods or assumptions prescribed by law.
Professional Guidance Code of Conduct Precept 8: Control of Work Product An Actuary who performs Actuarial Services shall take reasonable steps to ensure that such services are not used to mislead other parties. An Actuarial Communication may be used by another party in a way that may influence the actions of a third party. The Actuary should recognize the risks of Misquotation Misinterpretation Other Misuse The Actuary should therefore take reasonable steps to present the Actuarial Communication clearly and fairly As appropriate include limitations on distribution and utilization This precept ties to a number of others, such as Precept 1 (actuary shall not engage in deceit or misrepresentation that reflects adversely on the actuarial profession) and ASOP 41 (which lists a number of disclosures the communication should contain to make sure it is present clearly and fairly.) It seems a little unreasonable to make an actuary avoid a risk of misreading (which is clearly different than misinterpretation!)
Professional Guidance ASOP 29: Expense Provisions in Property/Casualty Insurance Ratemaking Section 2.9: Residual Market Provision Defined: A provision for the entity’s costs that represents its share of residual market profits. Section 2.11: Taxes, Licenses and Fees Defined: All taxes and miscellaneous fees except federal and foreign income taxes. Section 3.7: The actuary should include a provision in the rate for any residual market costs or statutory assessments expected to occur during the period of time the rates are expected to be in effect.
Professional Guidance ASOP 12: Risk Classification 3.3.2 Actuarial Considerations ⎯ When establishing risk classes, the actuary should consider the following, which are often interrelated: a. Adverse Selection b. Credibility c. Practicality
Professional Guidance ASOP 29 Expense Provisions in P/C Ratemaking 3.4 Expense Trending—In determining the future expense components of the rate, the actuary should be guided by Actuarial Standard of Practice (ASOP) No. 13, Trending Procedures in Property/Casualty Insurance Ratemaking. Also includes a reference to ASOP 41 as do all other ASOPs.
Professional Guidance ASOP 36 – Statement of Actuarial Opinion 3.7.2 The actuary should only make use of another’s analyses or opinions when reasonable to do so. The actuary should consider the following: a. the amount of the reserves covered by another’s analyses or opinions in comparison to the total reserves subject to the actuary’s opinion; b. the nature of the exposure and coverage; c. the way in which reasonably likely variations in estimates covered by another’s analyses or opinions may affect the actuary’s opinion on the total reserves subject to the actuary’s opinion; and d. the credentials of the individual(s) that prepared the analyses or opinions. . Evaluation Based on Actuary’s Use of Another’s Unpaid Claims Estimate Analysis or Opinion—In the course of conducting a reserve evaluation, the actuary may make use of another’s supporting analyses or opinions. The actuary should understand the intended purpose of the analyses or opinions, and assess whether the analyses or opinions are consistent with the stated basis of presentation of the reserves. The ASOP does not directly indicate the actuary should consider the quality of the analysis. However it does speak to the following: Where, in the opinion of the actuary, the analyses or opinions of another need to be modified or expanded, the actuary should perform such \analyses as necessary to issue an opinion on the total reserves. If in using the analyses or opinions of another the actuary reaches conclusions materially different from those in the analyses or opinions used, the actuary should, when practical, contact the appropriate parties to discuss the differences. Where material differences exist, the issues underlying the differences should be understood by the actuary. Materiality in this situation should be measured relative to the actuary’s opinion, not relative to the analyses or opinions used.
Professional Guidance ASOP 39: Treatment of Catastrophe Losses in Property/Casualty Insurance Ratemaking 2.3 Contagion—A lack of independence between the occurrence of losses among different entities. The actuary should take reasonable steps to identify the perils or events that have the potential to generate catastrophe losses that differ materially from the expected aggregate losses or the expected distribution of losses.
Professional Guidance ASOP 39: Treatment of Catastrophe Losses in Property/Casualty Insurance Ratemaking Section 3.1 Identification of Catastrophe Perils or Events These perils or events have at least one of the following characteristics: a. The Potential to Display Contagion—Examples of perils that display contagion include windstorms, earth movement, and freezing. b. Infrequent Occurrence The actuary should take reasonable steps to identify the perils or events that have the potential to generate catastrophe losses that differ materially from the expected aggregate losses or the expected distribution of losses. Some events that occur infrequently have the potential to produce losses that can significantly distort the historical experience. An example of such an event is an explosion that results in the release of toxic material. If the experience data contain such events, using this experience data without adjustment may overstate the catastrophe provision in the rates. If the experience data do not contain such events, using this experience data without adjustment may understate the catastrophe provision in the rates.
Professional Guidance ASOP 30 Treatment of Profit and Contingency 2.1 Capital - The funds intended to assure payment of obligations from insurance contracts, over and above those funds backing the liabilities. 2.3 Cost of Capital - The rate of return that capital could be expected to earn in alternative investments of equivalent risk; also known as opportunity cost. 2.5 Insurance Risk - The extent to which the level or timing of actual insurance cash flows is likely to differ from expected insurance cash flows. 2.10 Operating Profit - The sum of underwriting profit, miscellaneous (non-investment) income from insurance operations, and investment income from insurance operations. Associated income taxes are recognized when the analysis is on a post-tax basis.
Professional Guidance ASOP 30 Treatment of Profit and Contingency 2.10 Operating Profit—The sum of underwriting profit, miscellaneous (non-investment) income from insurance operations, and investment income from insurance operations. Associated income taxes are recognized when the analysis is on a post-tax basis. 2.13 Underwriting Expenses—All expenses except losses, loss adjustment expenses, investment expenses, policyholder dividends, and income taxes. 2.14 Underwriting Profit—Premiums less losses, loss adjustment expenses, underwriting expenses, and policyholder dividends. If the variation in expected outcomes within a risk class is too great, adverse selection is likely to occur. It is desirable that risk classes in a risk classification system be large enough to allow credible statistical inferences regarding expected outcomes. When the available data are not sufficient for this purpose, the actuary should balance considerations of predictability with considerations of homogeneity. The actuary should use professional judgment in achieving this balance. The actuary should use professional judgment in balancing the potentially conflicting objectives of accuracy and efficiency, as well as in minimizing the potential effects of adverse selection. The cost, time, and effort needed to assign risks to risk classes will increase with the number of risk classes.
Professional Guidance ASOP 1: Introductory ASOP May “May” as used in the ASOPs means that the course of action described is one that would be considered reasonable and appropriate in many circumstances. Must/Should “Must” as used in the ASOPs means that the ASB does not anticipate that the actuary will have any reasonable alternative but to follow a particular course of action. In contrast, the word “should” indicates what is normally the appropriate practice for an actuary to follow when rendering actuarial services. “May” is not intended to indicate that a course of action is reasonable and appropriate in all circumstances, nor to imply that alternative courses of action are impermissible.
Professional Guidance ASOP 38 Using Models Outside Actuary’s Area of Expertise When issuing actuarial communications incorporating catastrophe modeling within the scope of this ASOP, the actuary should disclose the following, as appropriate: the model used and the project’s objective; a description of the user input that was incorporated into the model; a description of adjustments made to the model results; the extent of any reliance placed upon the work of another actuary.
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