News You Can Use NAIC Subgroup Refines Definition of “Qualified

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T H E
E
N E W S M O N T H L Y
Academy Membership a Key Element
NAIC Subgroup Refines Definition
of “Qualified Actuary”
D
URING A FEB. 5 TELECONFERENCE, state
O F
SEE JQA, PAGE 9
Academy Launches “Essential Elements” Series
T
HE ACADEMY has developed a new series of con-
SOA officers removed
from Academy board
membership
2
Beyond Solvency
Focusing on the
sustainability of financial
security systems
4
—Bill Rapp
New Members
5
Welcome to the newest
members of the Academy
Hill Testimony
11
Academy explains ACA risk
corridors
A C T U A R I E S
Board Action
care (LTC) financing. The brief, two-page document
addresses criteria that should be considered in any reform
of the LTC system, including sustainability, eligibility,
affordability, coverage options, and compatibility with
existing structures. Raising Social Security’s Retirement
Age discusses the program’s long-term financial issues,
the benefits of raising the retirement age, and how raising
the program’s full retirement age would affect retirees.
Future topics addressed in the “Essential Elements”
series are expected to include:
➥ Means testing of Social Security;
➥ Medicare reform options;
➥ Medicare solvency;
➥ The National Flood Insurance Program;
➥ Pension funding policies;
➥ The Terrorism Risk Insurance Program.
More information about release dates and upcoming
papers in the series is available on the Academy’s website.
O F
cise and informative public policy papers designed
to provide a quick, understandable overview of key
public policy issues of interest to Academy members, policymakers, and the general public.
Each paper in the “Essential Elements” series will provide a succinct analysis, supplemented by graphics, that
allows the reader to quickly grasp an issue and its significance in the public debate. Topics in the series will reflect
all areas of actuarial practice, including health, life, pension, and property/casualty issues.
“With concise explanations and infographics, ‘Essential Elements’ is designed to boil down often complex
content into plain and relevant terms for a broader
audience that might be unfamiliar with or have limited
knowledge of the subject matter,” said Academy President Tom Terry.
One of the first papers in the series, Long-Term Care
Financing, explores public policy options for long-term
A C A D E M Y
News You Can Use
A M E R I C A N
during which the subgroup settled on the language of the
new definitions.
The subgroup’s aim is definitions that are uniform
across practice area and that address concerns raised by
some regulators regarding discipline and other matters of
qualification. In previous correspondence and meetings
T H E
insurance regulators took the first formal step
toward adoption of new definitions of “qualified
actuary” for life, health, and property/casualty appointed
actuaries who sign prescribed National Association of
Insurance Commissioners (NAIC) Statements of Actuarial Opinion (SAO). While the new definitions contain
significant changes, they will not take effect without
additional approval by the NAIC, and they remain consistent with current definitions in one critical respect:
They incorporate membership in the Academy as an
essential feature.
The NAIC’s current definitions recognize Academy
membership as necessary for signing NAIC SAOs, and in
a Feb. 3 letter to the NAIC’s Joint Qualified Actuary Subgroup, Academy President Tom Terry pointed out that
being an MAAA continues to be “the foundational vital
element” in defining the “qualified actuary.” PresidentElect Mary D. Miller and Past President Cecil Bykerk represented the Academy in the subgroup’s Feb. 5 open call,
Actuarial UPDATE
F
C A L E N D A R
MARCH
6-9 NCOIL spring meeting, Savannah,
Ga.
11 Executive Committee meeting,
Washington
Academy NEWS Briefs
13-14 Health Practice Council Capitol
Hill visits
Board Action
14 Webinar, Precept 13: Preserving
Integrity and Public Trust
A
20 Academy Capitol Forum: Meet
the Experts webinar, Actuary Serving
Congress: A Conversation With GAO’s
Chief Actuary
23-26 Enrolled Actuaries Meeting,
Washington
29-April 1 NAIC spring national
meeting, Orlando, Fla.
30–April 1 Ratemaking and Product
Management seminar, Washington
30–April 4 ICA 2014, Washington
APRIL
28 Retirement for the AGES: Building
Enduring Retirement-Income Systems
policy forum, Washington
MAY
1-2 Academy Board of Directors
meeting, Washington
15-17 NAAC Meeting, Quebec, Canada
JULY
10-13 NCOIL summer meeting, Boston
14 Academy Summer Summit,
Washington
AUGUST
7 Executive Committee meeting,
Washington
16-19 NAIC summer national meeting,
Louisville, Ky.
SEPTEMBER
15–16 Casualty Loss Reserve Seminar,
San Diego
OCTOBER
7-8 Academy Board of Directors
meeting, Washington
To continue receiving the
Update and other Academy
publications on time,
remember to make sure
the Academy has your
correct contact information.
Academy members can
update their member profile
at the member log-in page
on the Academy website.
www.actuary.org
T ITS JAN. 15 MEETING, the Acad-
emy’s Board of Directors approved a
resolution removing the presiden­tial
officers of the Society of Actuaries (SOA) from
membership on the board. The action does not
change the Academy’s steadfast commitment to
strong rela­tionships with all U.S.-based actuarial
associa­tions, including the ASPPA College of Pension Actu­aries, the Casualty Actuarial Society, the
Conference of Consulting Actuaries, and the SOA.
More information about these changes can be
found in a Feb. 6 letter from Academy President
Tom Terry to Academy members.
Volunteer Attestation Due Now
D
O YOU SERVE ON AN ACADEMY
COUNCIL, committee, task force, or
work group? If so, thank you for your
dedicated service to fulfilling the mission of the
Academy.
Above and beyond your technical expertise,
the effectiveness of your Academy work on
behalf of the public and the U.S. actuarial profession hinges on providing unbiased, reliable
information for policymakers and others who
need actuarial insight to inform their decisions
regarding U.S. fiscal and societal challenges.
One of the Academy’s essential measures to
cultivate the highest level of professional objectivity and independence when performing Academy work is the annual conflict of interest (COI)
acknowledgment and continuing education (CE)
attestation that every volunteer must sign.
Please take a moment now to review and sign
your COI acknowledgment and CE attestation.
Action Steps Required Now
1. L og in to the Academy membership page.
2. Once logged in, click on the COI and CE
Acknowledgment link in the right column to
access the acknowledgement page.
3. Read and sign the document by clicking on the
check boxes for each question.
4. Click just once on the Submit acknowledgment for both to submit your response.
For more information about the Academy’s
commitment to professional objectivity, please
visit the Professional Objectivity at the Academy
page. If you have questions, you may contact the
Academy’s professionalism department at objectivity@actuary.org. If you experience any technical difficulties, please contact the Academy’s
membership department at membership@
actuary.org or by calling (202) 223-8196.
NAAC Annual Report
T
HE NORTH AMERICAN ACTUARIAL COUNCIL
released its 2012-2013 annual report, outlining its work
and highlighting its accomplishments for the year.
NAAC, an association of the nine North American actuarial
organizations, promotes coordination, cooperation, and
trust among the different organizations representing actuaries in Canada, Mexico, and the United States.
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
2
IN THE NEWS
As Capitol Hill lawmakers
continue their inquiry into risk
corridors within the Affordable Care Act (ACA), the Academy has worked to educate the
public on risk corridor provisions by supplying the House
Oversight Committee with
written testimony by Academy
Senior Health Fellow Cori Uccello (see story, Page 11) and in
the following news stories:
➥ Time
➥ Politico
➥ Kaiser Health News
➥ ThinkProgress
➥ AHIP
➥ Reason Hit & Run blog
➥ John Goodman’s Health
public pension costs in Pensions & Investments and the
New London, Conn., newspaper The Day.
A story in the Dallas Morning
News cites the Academy issue
brief The 80% Pension Funding
Standard Myth.
A Richmond (Va.) Times-Dispatch
article on long-term care premiums cites research by Academy members.
An Academy letter to the Social
Security Advisory Board from
December 2003 was cited in a
report by the Center on Budget
and Policy Priorities.
C asualty N ews
Check out the
2013 P/C Loss Reserve Law Manual
The 2013 P/C Loss Reserve Law Manual, which is designed
to help appointed actuaries comply with the NAIC Annual
Statement requirements for statements of actuarial
opinion, is now available as a CD-ROM or online (for
multiple-user, single-user or per-jurisdiction access).
Order it online or by mail/fax.
CASUALTY BRIEFS
➥ N. Terry Godbold, principal and consulting actuary for
Pinnacle Actuarial Resources in Roswell, Ga., has joined the
Property Lines Committee.
Policy Blog
➥ Insurance & Financial Advisor
➥ InsuranceNewsNet
➥ Insurance Broadcasting
An Academy news release on
the USA Retirement Funds Act
was reported on by CBS Moneywatch, Pensions & Investments,
and BenefitsLink.
Academy Senior Pension Fellow Don Fuerst was quoted on
The Academy was mentioned
in articles explaining ACA
requirements for small business owners published in
Insurance Technology and
California Broker.
An Academy news release
pledging public assistance
with insurance modernization
was reported by InsuranceNewsNet.
What Actuaries Need to Know About Documenting CE
M
ost actuaries know they must complete 30 hours
of continuing education (CE) each year to maintain
their qualifications. But not all actuaries realize that
they must also document their CE.
Why document CE? Because the U.S. Qualification Standards (Section 6 in particular) require actuaries to show
evidence that they have completed required CE if such evidence is requested. And it is not just the Actuarial Board for
Counseling and Discipline (ABCD) that might request CE
documentation. Employers, regulators, or anyone relying on
an actuary’s opinion could ask to see evidence of CE compliance. In fact, says John Morris, chair of the Committee on
Qualifications, “actuaries should be prepared to demonstrate
compliance to anyone who asks.”
www.actuary.org
Documenting CE isn’t difficult or time-consuming. The
Academy’s online tool, TRACE, is prepopulated with many of
the CE-earning opportunities offered by the five U.S. actuarial organizations and can also track “other” activities. Kathy
Riley, a member of the ABCD, recommends keeping records
throughout the year. “That way,” Riley says, “you won’t be
caught short at the end of the year. Plus, using a tool like
TRACE means that your CE record is available on request.”
Actuaries who choose not to use TRACE would be wise
to keep certificates of attendance (if any), meeting outlines
or handouts, notes, the name of the CE provider, the date
and hours attended, and a brief description of the subject
matter. The U.S. Qualification Standards require that actuaries maintain records of compliance for at least six years.
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
3
L ife N ews
Due Premiums and PBR in VM-20
T
HE LIFE RESERVES WORK GROUP submitted a revised
amendment proposal on Feb. 5 to the Life Actuarial Task Force
of the National Association of Insurance Commissioners
regarding treatment of due premiums in the VM-20 reserve calculation. The current draft of VM-20 is silent on the topic. In its proposal, the work group suggests treating due premiums like deferred
premiums when determining the adjustment for the deferred
premium asset. The work group also urges that due premiums be
included in the expected future cash flows when calculating deter-
ministic and stochastic reserves.
On Feb. 24, the Life Principle-based Approach Practice Note
Work Group released a draft practice note to assist actuaries with
the implementation for principle-based reserves (PBR) under
VM-20. The practice note details anticipated practice for calculating minimum valuation standard statutory reserves under VM-20
for life insurance products. Since the principle-based approach for
life reserves is still pending adoption in the states, the practice note
wasn’t developed using a survey of current actuarial practices.
Moving Beyond Solvency to Sustainability
by
I
T o m T e rr y
’VE HAD LOTS OF CONVERSATIONS this year about the
role of the Academy. What issues are on our plate? What can we
expect going forward? These are good questions, and I’d like to
share my thoughts on them with all of you.
For starters, I encourage you to take a look at the Academy’s 2014
priorities in the January issue of the Update. We take seriously our
mission to serve the public and the U.S. actuarial profession, and
those priorities provide a good snapshot of how we intend to do
that this year.
But there’s a broader context that we need to bring into focus.
The Academy will soon be celebrating its 50th anniversary as the
national association for U.S. practicing actuaries. The demands on
us as an association and as a profession are intensifying. Virtually
all of our nation’s large, public financial security systems are feeling
unprecedented financial and demographic stress and uncertainty.
These systems all are in some way reliant on actuarial science. And
while solvent financial security systems are essential, that’s not
enough. Successful systems also need to be sustainable over time.
And so the public looks to us expectantly.
As the Academy, we have institutionalized the collective professional experience and wisdom of tens of thousands of seasoned professionals over the past 50 years. Our legacy of volunteer involvement is strong and growing.
What sets our profession apart—not by happenstance but by
design—is that at the core, we take on challenging problems. Individually, in our day jobs, we are professionals who have earned the
trust of our employers and clients to conduct challenging work with
an orientation toward quality and reliability. And collectively, as the
Academy, we address challenges that loom larger than what any
individual can presume to influence.
This is why the Academy is able to sharpen its focus on sustainability. We have embedded professional objectivity into our culture
and all of our processes. It’s a notable distinction that’s fundamental
as we step forward to address the problems of the country’s large
public financial security systems.
We are an Academy that represents the best of our profession. We
www.actuary.org
L ife N ews
2014 Life and Health Law Manual
Now Available
Designed to help appointed actuaries comply with the
requirements of the National Association of Insurance
Commissioners’ model Standard Valuation Law and the Model
Actuarial Opinion and Memorandum Regulation, the manual is
now available. Order it online or by mail/fax.
LIFE BRIEFS
➥ Kelly Chang, actuary for New York Life in Flushing, N.Y., has
joined the Nonforfeiture Modernization Work Group.
➥ Katie Cantor, principal for Oliver Wyman in New York, has
joined the Life Financial Reporting Committee.
will need to tap that long and strong volunteer legacy and meld it with
our members’ diverse views as we apply ourselves to these challenges.
There’s much at stake. The public expects more of us, and we
must do the same.
True: The Academy’s work always has provided invaluable public good by objectively illuminating public policy alternatives. Also
true: The need today is even greater; the equation even bigger. And
today’s equation must feature sustainability.
As actuaries, we can’t help but dissect and opine on the many
meanings of such a concept. But we can’t let that slow us down.
At least for now, let’s agree to use “sustainability” simply as a call
to action. How do we answer the call? We use our collective wisdom to infuse into our work—as individuals and as a profession—a
heightened focus on sustainability as a means of fulfilling our public
interest responsibility.
TOM TERRY is the Academy’s president.
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
4
New Academy Members
I
N 2013, 918 actuaries took a step forward in their professional journey and joined the
Academy. They are in good company. Counting this newest crop, the Academy, as of
Dec. 31, 2013, boasted 17,908 members.
Kevin Isaac Abrahams
Nicholas A. Bauman
Ling H. Cai
Benjamin J. Clark
Olga A. Achkasova
Annik Beaulieu
Elizabeth D. Caldwell
Joel D. Clark
Daniel R. Acton
Eric M. Bebyn
Lydia F. Calkins
Sarah Marie Clemens
Daniel C. Akier
Andrew T. Behnke
Thomas J. Callahan
Lisa M. Coates
Olukemi I. Akinyemi
Richard D. Behnke
Yang Cao
Andrew A. Coleman
Rohan N. Alahakone
Bo D. Bell
Thomas J. Carle
Barbara R. Collier
Laura A. Allen
Nathan K. Berggoetz
Jamie Carlson
Anthony G. Conforti
William H. Allen
Lindsey N. Besch
Peter Carlson
Patricia Conway
Julie N. Alonso
Elizabeth G. Beslow
Caryn C. Carmean
Duncan K. Cook
Benjamin Leonard Alter
Karen L. Bethea
Michael R. Carroll
Arden J. Cooke
Trisha A. Amrose
Shamir Bhimani
Kevin J. Cassidy
Christopher Judd Copeland
Casey T. Anderson
Zuowei Bi
Jennifer M. Castelhano
Jocelyn A. Cornick
Corey T. Anderson
Anthony J. Bierke
Alison M. Castlie
Kathryn A. Costa
Eric H. Anderson
Matthew A. Billas
Jillian Cataloni
Brian Donald Cotey
Tyler M. Anderson
Megha Billimoria
William Cember
Christine L. Cramblit
Yata S. Anderson
Kevin Bills
Alison M. Chafin
Laura Cremerius
Irena Andreevska
Suzanne Bilodeau
Cuiwei Chai
Stephanie T. Crownhart
Paul Andrejko
Nadia Teresa Binkley
Chak Yu Chan
Weiyi Cui
Christopher Andrews
Eric R. Blancke
Esther K. Chan
Jeremy A. Cunningham
Jack A. Angert
Clint A. Blankenship
Lon Chang
Lydia A. Czabaniuk
Samuel Y. Annan
Eliezer Blum
Sze Nga Chan
Yifei Dai
Katie E. Antoline
JosephL. Bochicchio
Nabanita Chatterjee
Jason R. Daly
Chad J. Arlt
Tamara Bogojevic-Catanzano
Nikita Chaudhry
Ashley N. D’Amico
Rebecca Armon
Batya M. Bogopulsky
Bryan R. Chen
Kristen Dardia
Bradley B. Armstrong
Laura M. Bonja
David C. Chen
Derek W. Davey
Daniel Armstrong
Tyler W. Boswell
Jun Chen
Erin G. Davidson
Tiffany M. Arnold
Stephen A. Bowen
Yi Chen
Gregory K. Davis
Lauren E. Aronson
Ekaterina Boyan
Yufei Chen
Matthew D. Davis
Jennifer M. Aschenbrenner
Kirsten J. Boyd
Zhe Chen
Amanda Dawson
Jason T. Ash
Jennifer L. Bradburn
Carrie K. Cheung
Albert de Hombre
Amy M. Asteriades
Josiah D. Brehm
Richard Chevalier
Jill L. Deakins
Michael Thomas Atkinson
Kevin P. Breslin
Valerie Chezem
Akash Deb
Michelle T. Aubin
Nicholas B. Brink
Richard P. Chianese
Ellynne Dec
Daniel W. Bak
Jonah N. Broulette
Kudakwashe Chibanda
Aimee DeLong
Aditi Baker
Eliot L. Brown
Michael Arthur Chin
Joshua J. DeLong
Daniel J. Baker
Caleb J. Brown
Henning Chiv
Melinda M. DelPrince
Kevin P. Baker
Christopher Brown
Nanna K. Cho
Vincent M. DelPrince
Scott David Baker
Matthew L. Brustad
Byongkee Choi
Abhinav K. Dendukuri
Bryan Jared Baldwin
Mark R. Buchholtz
Hee Jin Choi
Min Deng
Marco Baratta
Benjamin E. Buckner
Jee-Chyng Chow
Xinghua Deng
Joe Barrera
Caleb G. Buecksler
Timothy W. Chow
Antonio DeSario
Matthew C. Barringer
Jeffrey A. Buero
Laurence Christensen
Christie M. Dietrich
Christopher A. Bartak
Rachel Butler
Meng-Tsung S. Chu
Evgeniy V. Bashunov
Ryan Caesar-Brown
Ryan Ciaccio
www.actuary.org
SEE NEW MEMBERS, PAGE 6 ➜
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
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NEW MEMBERS CONTINUED FROM PAGE 5
Patrick M. Digan
Jeffrey B. Frizzell
Ridhima Handa
Esther Z. Hy
Andrew Dilworth
Jennifer R. Fucile
David G. Handelman
LuCretia L. Hydell
Christopher P. Diorio
Micah J. Fuerst
Alison N. Handschke
Aaron K. Iddings
David Dodge
Cory Fujimoto
Aaron G. Haning
Laura B. Igl
Anshita Dogira
Jonathan R. Fulop
Kerri L. Harlow
Danish Iqbal
Daniel Donahue
Melanie L. Galarneau
Jason S. Harris
Qamar U. Islam
Huaye Dong
Manrique Gallegos
Justin A. Harris
Chris Izbicki
Ross W. Donovan
Kelly R. Gamlin
Elizabeth J. Hart
Sean T. Jackson
Brent A. Dooley
Timothy T. Gao
Thomas M. Hartsig
Bushra Jafri
Jacob Dale Dority
Louis Gariepy
Justin C. Harvey
Steven N. Jankovich
Nathaniel H. Dorr
Thomas Garrity
David Y. Hausman
Helaine Jarret
Mark K. Dresden
Aaron C. Gates
David M. Hayes
Brent M. Jensen
Michael D. Duberowski
Wu-Chyuan Gau
Benjamin Haynes
Scott E. Jensen
Dominic Duke
Trisa-Lee B. Gaynor
Kyle P. Hays
Miriam D. Jin
Alicia Duvendeck
Marc Gebler
Andrew R. Heidrich
Melissa K. Joda
Bhargav N. Edupuganti
Katherine R. Geller
Kevin Heisler
Jeremy A. Johns
Jacob B. Efron
Matthew S. Genal
Peter Hennes
Andrew Johnson
Romina M. Egan
Robert Gentry
Erin E. Hennessey
Brittany E. Johnson
Zachary M. Eisenstein
Jon E. Gerdin
Hayley M. Hillman
Derek S. Johnson
Philippe Elkabas
Anthony M. Ghabour
Danielle W. Hilson
Richard G. Johnson Jr.
Jenny Encarnacion
Simon Giang-Tran
Ka Tang Ho
Horace R. Jones
Tricia G. English
Karen J. Gibbons
Andrew W. Hoffman
Steven Lloyd Jones
Ryan J. Esplin
Natasha W. Gikunju
Daniel L. Hoffman
Victoria L. Jones
Thu Y. Essaheb
Yoram S. Gilboa
Laura A. Hoffman
Sanat D. Joshi
David D. Evans
Jordan Givan
Rebecca L. Hoffmann
Michael S. Joyner
Jeremy P. Evans
Scot A. Glasford
Katherine Hoke
Christopher D. Juhlke
Archibald H. Ewart III
Shannon K. Glonek
Charles G. Hollar
Kevin H. Kang
Fiona Y. Fan
Dennis Goebel
Chad M. Hollenbach
Jason A. Karcher
Guangwei Fan
Pei Ying Goh
Eric N. Holt
Kazem Karimi
Karen A. Farrell
Lauren Goldstein
Matthew G. Holton
Loren Karleskint
Jordan W. Fassler
Allen F. Gonczol
Russell F. Hosie
Robert N. Kaskovich
Richard L. Fecteau
Monika Gontarek
Jimmy Houng
Melissa J. Kathman
Amarya R. Feinberg
Joshua J. Goodwin
Peng Zhir How
Adam L. Keach
Adam W. Feller
Frederick N. Gore
Duane M. Howard
Mitchell J. Keating
David M. Fernandez
Aaron J. Graham
Michael D. Hoyer
Andrew M. Keeley
Adam C. Field
Christopher A. Gravatt
Anton A. Hu
Jacqueline L. Keller
Benjamin A. Field
Colin Richard Gray
Rong Hu
Kevin A. Keller
Vadim Filimonov
Jonathan M. Gray
Chenyan Huang
Maureen S. Keonakhone
Timothy Ryan Filzen
Travis J. Gray
David S. Huang
Daniel J. Keough
Christi Finnegan
Eric Greenberg
Frank Y. Huang
Scott C. Kern
Matthew R. Fishel
Aaron M. Guimaraes
Lihu Huang
Kylee Kessinger
Joseph O. Fitzgerald
Carl R. Gullans
Penglin Huang
Oliver B. Kiel IV
James M. Flake
Jharna Gupta
Rebecca M. Huang
Duk Kim
Joshua Mark Fletcher
Fiona E. Ha
Amanda R. Hug
Jae H. Kim
Holly M. Flocker
Sarah Haberman
James A. Humphrey
Sandra Kipust
Jesus Flores-Komiyama
Julie Hagerstrand
Sarah L. Hunter
Andrew E. Kirchner
Robert J. Foote
Casey Hahn
Laura N. Huscroft
Pamela M. Kirklin
Matthew D. Ford
Ravishekhar Hallali Rajashekhar
Jessica A. Hussong
Alan D. Klahr
Vance L. Forrest
Michael R. Hamachek
John James Hutchinson
Kenneth S. Klassman
Jon Frangipani
Jordan C. Hammond
Katherine Le Huynh
Scott J. Klein
Laura E. Frederick
Angela K. Hancock
Christina Hwang
Nicholas Fries
Geoffrey H. Hancock
Max S. Hwang
www.actuary.org
SEE NEW MEMBERS, PAGE 7 ➜
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
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NEW MEMBERS CONTINUED FROM PAGE 6
Todd P. Kleina
Mary T. Leong
David J. Markowitz
Christopher B. Motta
Daniel G. Klibert
Beauclaire A. Leslie
David Y. Markowitz
Judy Mottar
Joanna B. Kluza
Robert P. Lessard
Monica Zepeda Marquez
Gregory L. Mottet
Lee W. Knepler
Nicolas Levesque
Andrew R. Martin
Jenna M. Mozdzen
Erin J. Knopf
Andrew I. Levin
Lee W. Mathewson
Tsahai N. Mramba
Maria S. Knox
Adrienne J. Lewis
Elizabeth Matlack
Jeffrey J. Mueller
Aaron Koch
Bo Li
Stephanie H. Matto
Michael Muggee
David B. Koenig
Fangfang Li
Jennifer Z. Mattson
Matthew K. Mullen
Justin Dean Koenig
Guang Yan Li
Ryan Mazun
Philip Mullen
Brennan Kohrherr
Kathleen Li
James J. McCarthy
Leigh J. Murdick
Nicholas J. Koll
Siqi Li
Kenneth A. McClune
Jonathan Thomas Murello
James Koller
Quintin Z. Li
Michael Anthony McComis Jr.
Matthew Grayton Murphy
Russell J. Kolmin
Yvonne Liao
Patrick F. McCormack
Michael P. Murphy
Nick A. Komissarov
Chao Lin
Joshua D. McDonald
Scott P. Murphy
Eric Koo
Xiaoyun Ling
Richard R. McDonnell
Diana Murrah
William R. Kopcke
Sarah A. Linszner
William Bryan McGee
Daniel B. Myers
Parker B. Koppelman
Stephen Littleton
Joseph McGovern
Treva Myers
Michael A. Kornhauser
Chi-Jou Liu
Tenesia McGruder
Jill Mysliwiec
Eric P. Krafcheck
Christine Liu
Erin McIlwain
Jessica M. Naber
Benjamin C. Kraus
Jackie Liu
Andrew M. McIntosh
Ehren Nagel
Kevin M. Krebs
Jennifer Liu
Samantha M. McLeod
Sameer Singh Nahal
Ryan D. Krisac
Jianchun Liu
Justin A. Meade
Kenichi Nakajima
Anna Krylova
Joseph A. Liu
Nettie R. Meier
David V. Naramore
Brian D. Krzych
Li Liu
Katherine M. Meiser
Shana M. Neeson
Carrie H. Kuczak
Lian Liu
John H. Meisse
Gary J. Nelson
Jacky Tai Kwan
Xiongbin Liu
Jason P. Melek
Katherine Nelson
Jill A. Labbadia
Yan Liu
Xiangchen Meng
Michael S. Nelson
Hillary H. Ladwig
Irene Logis
Marlee R. Mengel
Brent Neville
Kelvin Lam
Kean Mun Loh
Joseph S. Merkord
Thomas D. Newton
Charles G. Lamb
Brian T. Long
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Michelle Montgomery
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Thuong T. Le
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Erin E. Moody
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Simon Jervis Moody
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Edward Lee
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Ho Ki Lee
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Craig M. Maly
Joshua B. Morgan
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Elena Leger
Betsy F. Maniloff
Yanin P. Morgan
Andrew M. O’Brien
Debra Tsu Chi Lei
Brittany Manseau
Landon K. Mortensen
Preye S. Okah
Benjamin Allen Leifheit
Kathryn A. Marangola
Rudy Moser
Lauren E. Onderisin
Justin D. Lengemann
Michal A. Marciszko
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Theodore C. Leonard
Tracy A. Margiott
Isaac Mostov
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NEW MEMBERS CONTINUED FROM PAGE 7
Scott M. O’Neal
Edward L. Pyle
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Bryanne Saslo
Matthew L. St. Hilaire
Drew S. Osborne
Rebecca E. Rabern
Lauren A. Scarlata
Aubrey N. Stadtlander
Anthony M. Ostrem
David Raines
Jonathan P. Scarpa
Megan S. Stebar
Daniel O’Toole
Sandhya L. Ramakrishnan
Andrew Schaumburg
Jon P. Steffen
Mei Feng Ouyang
Jose A. Ramos
Mark D. Schluender
Aaron D. Stehle
Eric W. Overholser
Diana V. Rangelova
Preston L. Schnoor
Jeffrey Stehlgens
Ralph Ovsec
Mary E. Reading
Bradley L. Schoening
Tracy Sterling
Esteban Paez
Gregory A. Reardon
Kent S. Schrad
Matthew J. Sternemann
Eric Pahl
Jeffrey R. Reardon
Thomas L. Schroeder
Gavin T. Stewart
Christopher John Pailes
Stephanie Rech
Alexander John Schuh
Jason G. Stewart
Andrew A. Paine
Conor Redmond
Matthew A. Schwane
Brett L. Stocks
Louis N. Palacios
Brian P. Reed
Whitney Schwark
Benjamin A. Stockum
Catherine Pallivathuckal
Devin W. Reeves
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Daniel W. Stoddard
Ariel Pandey
Monica E. Reeves
Neil Selden
Robert K. Stoddart
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Erika J. Shadduck
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Alan M. Parham
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Eunyong Park
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Joowon Park
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NEW MEMBERS CONTINUED FROM PAGE 8
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JQA, continued from Page 1
with regulators, the Academy stated its support for keeping the current definitions in the life, health, and property/casualty instructions. In response to the subgroup’s request, the Academy offered
comments on proposed definitions and language for definitions
incorporating the MAAA credential.
In each instance, the new definitions adopted by the subgroup would require that a “qualified actuary” be a “member of
the American Academy of Actuaries who meets the basic education, experience, and continuing education requirements of
the Specific Qualification Standards for Statements of Actuarial
Opinion” for the NAIC annual statement in his or her respective
practice area.
Qualification would further require “knowledge of and experience with U.S. regulatory requirements, as set forth in the Qualification Standards for Actuaries Issuing Statements of Actuarial
Opinion in the United States, promulgated by the American Academy of Actuaries.” The new definition would also have the Acadwww.actuary.org
emy develop a verification program ensuring that these qualifications are met.
Another change in the new definitions is that a qualified actuary
could either be approved by the Academy as qualified to sign statutory opinions for his or her practice area, or be a member of the
Casualty Actuarial Society (CAS) to sign casualty-related opinions
or a member of the Society of Actuaries (SOA) to sign life- or
health-related opinions. The new definition states that you must
in all circumstances be a member of the Academy to be qualified.
Being a member of the SOA or of the CAS wouldn’t enable you to
be qualified if you weren’t also a member of the Academy. The
Academy has an existing process, through its Casualty Practice
Council, for approving appointed actuaries who aren’t CAS members but who are qualified to sign NAIC Property and Casualty
Annual Statement Loss Reserve Opinions. Such processes do not
exist for NAIC life and health annual opinions, but the Academy is
researching their implementation.
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
9
R isk M anagement & F inancial R eporting N ews
Deploying Data to Measure Financial Risk
M
AKE NO MISTAKE. At the Office of Financial Research
(OFR), data is king.
Established in 2010 with the passage of the DoddFrank Wall Street Reform and Consumer Protection Act, the OFR
has a unique mission, Rebecca McCaughrin, the OFR’s associate
director, told attendees at the Academy’s Feb. 21 webinar, “Systemic
Risk Monitoring at the OFR.”
“We are not a policymaking institution,” McCaughrin said. “We
are solely a research and data shop.”
The latest in the Academy’s lunchtime guest webinar series, the
webinar, which attracted participants at 188 sites throughout North
America, was moderated by Jeffrey Schlinsog, chairperson of the
Academy’s Financial Regulatory Reform Task Force.
While the OFR’s parent organization, the Financial Stability
Oversight Council, has the broad authority to manage risks to the
stability of the financial system, McCaughrin said, the OFR is more
narrowly focused on seeking to improve the quality of available
financial data. To that end, McCaughrin said, one of the first tasks
that the OFR undertook was to create an inventory of the types
of data being collected by the council’s member agencies and to
improve interagency communication about that data.
The OFR is also charged with conducting research on financial
stability and has developed a series of questions that it uses to guide
its research initiatives:
➥ How is the financial system performing its basic tasks?
➥ How is it changing, particularly with respect to new products
and markets?
➥ Where are risks accumulating?
➥ What forces are driving risk-taking activities, and what is the
interplay among them?
➥ What are the gaps in analytic data?
➥ How can risk management, policy, and supervision address
these risks?
➥ Do policymakers and companies have sufficient data and
information?
RISK MANAGEMENT AND
FINANCIAL REPORTING BRIEFS
➥ David Terne, regional pricing director for The Hartford
in Southington, Conn., and Navid Zarinejad, group head
of risk for Torus Insurance in New York, have joined the
ERM Committee.
➥ Elizabeth Brill, vice president and actuary for New York
Life in New York, has joined the Risk Management and
Financial Reporting Council.
McCaughrin walked webinar attendees though the beta version of a financial stability monitor that the OFR has developed
to assess risks to financial stability. A number of steps need to be
taken before the model moves to the next level of development,
McCaughrin said, including back-testing and reassessing model
weights and selection criteria, incorporating additional measures,
considering other sources of risk that are less quantifiable, and
developing complementary monitoring metrics and surveillance
tools. However, McCaughrin told webinar attendees, the process is
moving forward quickly. In addition to releasing a draft methodology paper in September, “we aim to have, not a 2.0 but at least a 1.5
version [of the model] ready by next December,” McCaughrin said.
The next webinar in the Capitol Forum series, “Actuary Serving Congress: A Conversation With the GAO’s Chief Actuary,” is
scheduled for March 20, noon to 1 p.m. Eastern. Featuring Frank
Todisco, chief actuary of the Government Accountability Office
(GAO) and former Academy senior pension fellow, and Don
Fuerst, the Academy’s current senior pension fellow, the webinar
will cover:
➥ The GAO and its role in the federal government;
➥ The role of the actuary at the GAO;
➥ The GAO’s work on key national issues, spanning all actuarial
practice areas.
Insurance Regulation Modernization
I
N WRITTEN TESTIMONY submitted to the U.S. House Com-
mittee on Financial Services Subcommittee on Housing and
Insurance, Jeffrey Schlinsog, chairperson of the Academy’s Financial Regulatory Reform Task Force stressed the need for actuarial
expertise as Congress considers modernization of insurance regulation in the United States.
In his testimony, submitted in advance of the subcommittee’s
Feb. 4 hearing on a report by the Federal Insurance Office (FIO) on
modernization of insurance regulation, Schlinsog said that effective
modernization should:
➥ Follow basic principles for designing effective and coordinated
regulatory systems;
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➥ Consider specific underlying risks and business models of insurance
affiliates of non-bank systematically important financial institutions;
➥ Address recommendations in the FIO report on state implemen-
tation of principle-based reserving, solvency oversight and capital adequacy regimes, and natural catastrophe loss mitigation.
In related activity, Academy President Tom Terry sent a letter on
Jan. 28 to the FIO urging that the reconstituted Federal Advisory
Committee on Insurance include one or more actuaries among its
members. “An active connection between the FIO’s advisory function and the U.S. actuarial profession’s public policy and professionalism voice would serve the public interest in supporting the
FIO in the fulfillment of its mission,” Terry wrote.
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
10
H ealth N ews
Academy Testimony on Risk Corridors
I
N CONGRESSIONAL TESTIMONY submitted on Feb. 4,
Academy Senior Health Fellow Cori Uccello described the risk
corridor program of the Affordable Care Act (ACA) as cutting
both ways for all concerned: taxpayers, purchasers of health insurance, and insurers.
Under the ACA program, insurers would receive a payment if
their losses exceeded a certain threshold, but would have to make
a payment if their gains exceeded a specified threshold.
“Risk corridors are used to mitigate the pricing risk that insurers
face when their data on health spending for potential enrollees are
limited,” Uccello said in testimony submitted in advance of a Feb. 5
hearing by the U.S. House Committee on Oversight and Government
Reform. “The temporary risk-corridor program reduces losses to
insurers that underestimate plan costs and reduces gains for insurers that overestimate plan costs.”
The Congressional Budget Office (CBO) estimates that the ACA
risk-corridor program will result in net payments from insurers to
the government of $8 billion for the 2015-to-2017 period.
The reason that insurers could end up paying instead of being
paid by the federal government under the risk-corridor program,
Uccello explained, is that, as in the Medicare Part D program, the
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risk corridors are “symmetric”—that is, the risk-sharing formula
applies the same way to gains as to losses. She illustrated as follows:
“If actual claims are within 3 percent of expected, insurers either
keep the gains or bear the losses. If actual claims exceed expected
claims by more than 3 percent, the federal government reimburses
the insurer for 50 percent of the losses between 3 and 8 percent,
and 80 percent of the losses exceeding 8 percent. If actual claims
fall below expected claims by more than 3 percent, the insurer pays
the federal government for 50 percent of the gains between 3 and 8
percent, and 80 percent of the gains exceeding 8 percent.”
A December 2012 fact sheet developed by the Academy’s Health
Practice Council explains the ACA’s risk-sharing mechanisms,
including the risk-corridor formula, in detail.
Good News on Health Spending
S
INCE 2009, the growth rate of U.S.
health spending has been leveling
off. Good news, certainly, but what
factors are causing the turnaround?
In a Feb. 6 Academy webinar, Senior
Health Fellow Cori Uccello and Lekha
Whittle, an economist in the Centers for
Medicare & Medicaid Services (CMS) Office
of the Actuary, discussed the deceleration in
health spending using findings from recent
analysis by the CMS Office of the Actuary
that was published in the January edition of
Health Affairs.
According to the CMS report, national
health spending in 2012 increased by only 3.7
percent, to a total of $2.8 trillion (or $8,915
per person). At the same time, the share of
the gross domestic product devoted to health
care spending dropped a percentage point
from the previous year, falling to 17.2 percent.
Factors reflected in the overall increase
include higher levels of personal health care
spending, which in 2012 accounted for 85
percent of overall national health spending,
offset by slower growth in noncommercial
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research and investment as well as a decline
in the net cost of private health insurance.
The increase in personal health spending, Whittle said, could be attributed to
both price and non-price factors. Prices
increased at a slower rate than in recent
years. At the same time, population growth,
age and gender shifts, and expanded use of
health care goods and services, represented
a larger share of spending costs.
Only three health care services accounted
for 61 percent of overall national health
care spending: hospital services (32 percent), physician and clinical services (20
percent), and prescription drug retail purchases (9 percent).
In 2012, hospital spending increased by
4.9 percent, reaching a total expenditure of
$882.3 billion. Growth in this service was
driven primarily by private health insurance, Medicare, and Medicaid. On the
other hand, spending on prescription drugs
slowed during 2012 because of a decrease in
prices, growing by only 0.4 percent.
“This slower growth in prices resulted
from the so-called patent-cliff, or wave of
brand-name patent expirations,” Whittle
said. “That occurred in 2012 as numerous
blockbuster drugs, most notably Lipitor,
Clavix, and Singulair, lost patent protection
in late 2011 and 2012.”
The largest payers of overall spending
were private health insurers (33 percent),
followed by Medicare (20 percent) and
Medicaid (9 percent).
Provisions of the Affordable Care Act
(ACA) have had little impact on total
national health spending so far.
“The projections model shows that there
was minimal impact from the Affordable
Care Act on national health expenditure
trends from 2010 through 2012,” Whittle said.
While there were a few provisions of
the ACA that increased spending in certain
sectors, including private health insurance,
as well as Medicare and retail prescription
drugs, the impact remained small, Whittle
said. “In some sectors,” Whittle added, “the
impacts of certain provisions were somewhat offsetting.”
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
11
P ension N ews
In Search of Better Funding Policies
I
N THE HOPES of spurring public discussion on best practices
for funding public pension plans, the Academy’s Public Plans
Subcommittee released a new issue brief, Objectives and Principles for Funding Public Sector Pension Plans, on Feb. 19.
“Underfunding typically results when sponsors don’t make
contributions on a consistent basis or when funding policy overemphasizes one objective at the expense of others,” said Academy
President Tom Terry in a press release announcing publication of
the issue brief.
As part of its analysis of factors that contribute to well-governed
public-sector employee pension plans, the Academy recommends
that funding policies governing each plan:
➥ Recognize that several competing objectives need to be balanced—security for the promised benefits, stable and predict-
Standard Review
I
letter to the Actuarial Standards Board (ASB), the Pension Committee applauded the ASB’s proposed revision
of Actuarial Standard of Practice (ASOP) No.
35, Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension
Obligations, and offered a handful of specific comments, suggesting
instances where language used in the proposed revision might be
unclear or redundant.
In a letter sent the same day, the Joint Committee on Retiree
Health also responded to the draft revision from the perspective of
actuaries practicing in the area of retiree health and other retiree
group benefits (RGB). The group noted that the lack of specific reference to RGB in the revised standard could make it difficult for
actuaries seeking guidance in the areas of retiree life measurement
or retiree health redesign. The joint committee urged the ASB to
pursue efforts aimed at improving coordination of this and other
ASOPs relating to pension and retiree group benefits.
N A JAN. 31
PENSION BRIEFS
➥ Don Fuerst, the Academy’s senior pension fellow,
participated in a roundtable on securing retirement income
for life at the National Academy of Social Insurance’s
Washington policy conference in January.
➥ Eric Freden, an actuary with the Segal Co. in Atlanta, has
become a member of the Joint Committee on Retiree Health.
➥ Victor Harte, a consultant for Milliman in Woodland Park,
N.J., and Robert Lista, a consulting actuary for Towers
Watson in New York, have joined the Pension Accounting
Committee.
www.actuary.org
able contributions, and assurance that the costs borne by different generations are handled equitably.
➥ Communicate how the objectives have been balanced and how
costs are expected to be met.
➥ Provide a procedure for determining contributions at specific
points in time, as well as a mechanism for enforcing that plan
members prefund benefits on an actuarially determined basis.
➥ Target the accumulation of sufficient assets for retirement and
establish a plan to make up for any variations in actual assets.
➥ Identify risks that could make it difficult to achieve these
objectives.
➥ Clearly disclose contribution policy effectiveness over time.
➥ Ensure that funding results are monitored and that adjustments
are made as needed.
Sparking Discussion
on Retirement Policy
T
HE INTRODUCTION of the USA Retirement Funds Act by Sen.
Tom Harkin (D-Iowa) on Jan. 30 is a hopeful sign that a national
discussion about retirement policy may be gaining traction. “The
discussion is long overdue,” said Academy President Tom Terry, in a
news release the Academy issued in response to the legislation.
It was to spark just such a discussion that the Academy developed
its Retirement for the AGES initiative, which was unveiled at a Jan. 17
Capitol Hill briefing. The initiative is designed to help policymakers
examine comprehensive proposals such as the Harkin legislation.
The Academy will host a forum on April 28 to offer ways that
its new framework can be used to assess the Harkin legislation and
other proposals. According to the Retirement for the AGES monograph, any well-functioning retirement system should conform to
the following principles:
➥ Alignment between stakeholders’ roles and their competencies;
➥ Governance that defines roles, reduces conflicts of interest,
manages competing needs, and properly staffs boards;
➥ Efficiency in maximizing returns and minimizing risks;
➥ Sustainability of the system, achieved through appropriate cost
allocation and protection from extraordinary market gyrations
and inflation.
Actuary Serving Congress: A
Conversation With GAO’s Chief Actuary
March 20/Noon-1 p.m. Eastern
Registration is open to everyone.
Register online now.
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
12
Actuarial Update
COMMUNICATIONS REVIEW
COMMITTEE
John Moore, Chairperson
Jenna Fariss
Paul Fleischacker
John Gleba
Ken Hohman
Gareth Kennedy
Barbara Lautzenheiser
Tonya Manning
Bob Meilander
Geoffrey Sandler
Debbie Schwab
Chet Szczepanski
DESIGN AND PRODUCTION
BonoTom Studio Inc.
DESIGNER
Paul Philpott
PUBLICATIONS AND MARKETING
PRODUCTION MANAGER
Cindy Johns
Joint LTC Study on Hold
T
to 2007 but found data from only four
companies offering comprehensive
policies, eight companies offering
policies limited to nursing facility care, and five companies
offering policies limited to
home health care that it considered suitable for its study.
As a result, the work group
suggested to the NAIC that its
work be suspended until it can
use results from a 2013 intercompany study that are expected to be
available at the end of this year.
HE JOINT ACADEMY/SOA
Long-Term Care Valuation
Work Group released a final
report Feb. 14 to the National
Association of Insurance Commissioners’ (NAIC) LongTerm Care Actuarial Working
Group on its development of
valuation morbidity tables for
long-term care (LTC) insurance from which valuation standards could be derived.
The work group examined data
from 18 insurance companies from 1984
American Academy
of Actuaries
PRESIDENT
Tom Terry
PRESIDENT-ELECT
Mary D. Miller
SECRETARY
John Moore
TREASURER
Art Panighetti
VICE PRESIDENTS
Mike Angelina
Mary Bahna-Nolan
Eli Greenblum
William Hines
David Shea
Karen Terry
EXECUTIVE DIRECTOR
Mary Downs
DIRECTOR OF COMMUNICATIONS
Charity Sack
ASSISTANT DIRECTOR FOR
PUBLICATIONS
Linda Mallon
EXECUTIVE OFFICE
The American Academy of
Actuaries
1850 M Street NW
Suite 300
Washington, DC 20036
Phone 202-223-8196
Fax 202-872-1948
www.actuary.org
Statements of fact and opinion in
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Monitoring
Operational Risk
I
PROFESSIONALISM BRIEFS
N A JOINT LETTER to the National Asso-
ciation of Insurance Commissioners’ (NAIC)
Solvency Modernization Initiative RBC Subgroup, three Academy risk-based capital (RBC)
work groups voiced concerns about a Dec. 9, 2013,
proposal on operational risk issued by the NAIC’s
Capital Adequacy Task Force.
The Jan. 30 letter—signed by Jeffrey Johnson,
chairperson of the Life Capital Adequacy Subcommittee; Alex Krutov, chairperson of the P/C RiskBased Capital Committee; and Donna Novak, chairperson of the Health Solvency Work Group—outlined
concerns specific to each group’s RBC formulas.
The Academy groups have been monitoring NAIC
efforts to refine current RBC formulas so as to
quantify and better capture operational risk in
insurers’ minimum capital requirements.
➥ On Feb. 18, Academy President Tom Terry
delivered a presentation, “Actuaries and the
Public Interest,” at the monthly meeting of
the Chicago Actuarial Association.
International
Comments
O
N JAN. 28, the Solvency Committee sub-
mitted detailed comments to the National
Association of Insurance Commissioners
(NAIC) related to its draft response to a proposal of
the International Association of Insurance Supervisors, Basic Capital Requirements for Global Systemically Important Insurers (G-SIIs).
Discount Rate Clarification
T
HE FINANCIAL REPORTING COMMITTEE sent a letter on Feb. 12 to the Financial
Accounting Standards Board (FASB) proposing wording to clarify the methodology used in
determining the “top down” discount rates.
The FASB had requested the clarification from
the Academy at a Dec. 2, 2013, roundtable discussion on the FASB insurance contracts exposure
draft. In a later note, FASB staff thanked the Academy, calling the clarification helpful.
A c t u a r i a l U P DAT E F E B RUA R Y 2 0 1 4
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