1. STATUTORY STATEMENTS OF ACTUARIAL OPINION – Changes for Today and Tomorrow Tomorrow’s Model Law 2003 CLRS Chicago, IL

2. 2 NAIC’S Property & Casualty Actuarial Opinion Model Law  What does it do?  Why?  When is it effective?  Who did it?

3. 3 Model Law -What it does  Creates an Actuarial Report Summary document to be submitted March 15.  Provides legal protection to the appointed actuary  Protects the confidentiality of material in both the Actuarial Report and the Actuarial Summary.

4. 4 Actuarial Opinion Summary Section 2 B 1.  “Every property and casualty insurance company domiciled in this state that is required to submit a Statement of Actuarial Opinion shall annually submit an Actuarial Opinion Summary, written by the company’s Appointed Actuary. This Actuarial Opinion Summary shall be filed in accordance with the appropriate NAIC Property and Casualty Annual Statement Instructions and shall be considered as a document supporting the Actuarial Opinion required in Subsection A.”

5. 5 Actuarial Opinion Summary Contents  The Summary must provide information on the opining actuary’s best estimate and/ or range of reasonable estimates.  The Summary must include additional information as required by the Annual Statement Instructions.

6. 6 Actuarial Opinion Summary  “A company licensed but not domiciled in this state shall provide the Actuarial Opinion Summary upon request.” Section 2. B. 2.  Normally the domiciliary state will be the only state needing the AOS, but sometimes the state needs to review the foreign parent company of one of its domestics.

7. 7 Actuarial Report and Workpapers  This law also reinforces the need for the company to file an Actuarial Opinion and for the actuary to prepare an Actuarial Report and Workpapers.  If the company fails to provide the Report at the request of the Commissioner, the Commissioner may engage a qualified actuary at the expense of the company to prepare a supporting Actuarial Report and/or Workpapers.

8. 8 Legal Protection  “The Appointed Actuary shall not be liable for damages to any person (other than the insurance company and the commissioner) for any act, error, omission, decision or conduct with respect to the actuary’s opinion, except in cases of fraud or willful misconduct on the part of the Appointed Actuary.” Section 2. D.

9. 9 Confidentiality  The Statement of Actuarial Opinion is a public document.  The Actuarial Opinion Summary and the supporting Actuarial Report and Workpapers are confidential.

10. 10 Confidentiality  “Documents, materials or other information in the possession or control of the Department of Insurance that are considered an Actuarial Report, workpapers or Actuarial Opinion Summary provided in support of the opinion, and any other material provided by the company to the commissioner in connection with the Actuarial Report, workpapers or Actuarial Opinion Summary, shall be confidential by law and privileged, shall not be subject to freedom of information, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.” Section 3. B.

11. 11 Confidentiality (continued)  The documents may be released to the Actuarial Board for Counseling and Discipline (ABCD) for the purpose of professional disciplinary proceedings if the ABCD can preserve the confidentiality of the documents.

12. 12 Confidentiality Exceptions  The commissioner: “May share documents, materials or other information, including the confidential and privileged documents, materials or information subject to Subsection B with other state, federal and international regulatory agencies, with the National Association of Insurance Commissioners and its affiliates and subsidiaries, and with state, federal and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material or other information and has the legal authority to maintain confidentiality”

13. 13 Why do we need it?  With the AOS, regulators can detect companies in need of further investigation in a more timely manner.  AOS filed shortly after the Annual Statement and Actuarial Opinion are filed.  May pre-empt the need for requesting the Actuarial Report before it’s due date of May 1.  Law will protect confidentiality of the AOS and the Actuarial Report and Workpapers.

14. 14 When is it effective?  Passed the NAIC Casualty Actuarial Task Force in June 2003.  Must be ratified by parent committees at NAIC in September.  States must take legislative action to pass a law or the commissioner may pass a regulation.  Earliest date would be for 2005 Annual Statement.

15. 15 Who did it?  The Actuarial Opinions Instruction Working Group of the Casualty Actuarial Task Force.  Richard Marcks of CT – Chair  Actuaries from the Insurance Departments of California, Illinois, Ohio, Pennsylvania and Texas.  Proposed by Texas in May of 2002.  Input from the AAA and interested parties.

16. Model Law Questions