ASOP #5 True BUSINESS PowerPoint Presentation Template PRESENTED - - PowerPoint PPT Presentation

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True BUSINESS

PowerPoint Presentation Template

11/16/2018

ASOP #5

PRESENTED BY

Robert Lang, ASA, MAAA Dagny Grillis, ASA, MAAA

BEYOND THE NUMBERS

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ASOP 5 . . . ASOP 5 . . . ASOP 5

Agenda

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ASOP 5 – History of Revisions

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ASOP 5 – History

Original ASOP 5 - 1988 1st Revision - 1991 2nd Revision - 2000 3rd Revision - 2011 4th (current) Revision – 2017

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Original ASOP 5 - 1988

• Provided clarity regarding commonly accepted

proper actuarial practice concerning:

• Plan benefits
• Trend
• Determination of Incurral Date
• Claim Settlement Expenses
• Time Value of Money
• In 1990, the standard was reprinted as part of the

actuarial standards of practice binder.

• Available as ASOP No. 5 Doc. 007.

ASOP 5 – History

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1st Revision ASOP 5 - 1991

• In 1991, the original ASOP 5 was reformatted by the

Health Committee of the Actuarial Standards Board (ASB) and adopted by the ASB.

• Set forth areas of analysis and inquiry that actuaries

must consider.

• Section of definitions was added.
• Not prescriptive of methods or procedures.
• Available as ASOP No. 5 Doc. 028.

ASOP 5 – History

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2nd Revision ASOP 5 – 2000

• Discusses incurred health and disability claims in

total (includes paid portion).

• Explicitly discusses long-term claim products.
• Removed claim settlement expenses section.
• Also, explicitly excludes deficiency reserves and

policy reserves.

• Available as ASOP No. 5 Doc. 089.

ASOP 5 – History

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3rd Revision ASOP 5 - 2011

• Available as ASOP No. 5 Doc. 126.
• Updated for deviation language

Which ASOP was this standard updated to refer to? A) ASOP 1 B) ASOP 23 C) ASOP 41

ASOP 5 – History

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3rd Revision ASOP 5 - 2011

• Available as ASOP No. 5 Doc. 126.
• Updated for deviation language

Which ASOP was this standard updated to refer to?

ASOP 5 – History

ASOP 41: Actuarial Communications

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4th Revision ASOP 5 – 2017

• Published March 2017.
• Emailed from the ASB April 27, 2017.
• Applies to work on or after September 2017.
• Available as ASOP No. 5 Doc. 186.
• Updated certain definitions and added others for

clarity and for consistency with other standards

ASOP 5 – History

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4th Revision ASOP 5 – 2017

• Explicitly addresses certain considerations in

estimating and analyzing incurred claims, including:

• behavior of claimants
• claim seasonality
• credibility
• payments and recoveries under

government programs, and

• the purpose and intended use of the

unpaid claim estimate.

ASOP 5 – History

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4th Revision ASOP 5 – 2017

• Expanded guidance regarding provider contractual

arrangements.

• Made standard consistent with the revised guidance

in ASOP 1 regarding use of the language “should consider”.

• Added a requirement to disclose any explicit

provision for adverse deviation.

ASOP 5 – History

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4th Revision ASOP 5 – 2017 SCOPE

From:

“This standard applies to actuaries who estimate or review incurred claims under health benefit plans on behalf of insured or noninsured entities”

To:

“This standard applies to actuaries who estimate or review incurred claims under health benefit plans

• n behalf of risk-bearing entities…”

ASOP 5 – History

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4th Revision ASOP 5 – 2017 Section 4 Communications and Disclosures

• Expanded with reliance on ASOP 41
• 4.1 Actuarial Communications - The

actuary should include the following items, as applicable, in an actuarial communication. LIST OF 7 ITEMS FOR INCLUSION

ASOP 5 – History

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What’s Next?

Project Proposals Committee or Task Force Exposure Draft Comments & Review Final Document

Actuarial Standards- Setting Process

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http://www.actuarialstandardsboard.org

References

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ASOP 5 – Current Revision

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• A guide for estimating or reviewing incurred claims under a health benefit plan

ASOP 5 Overview - Section 1

Page 27 When does this apply?

ASOP 5 Overview - Section 1

✔ ✖

Applies to actuaries who estimate or review incurred claims under health benefit plans on behalf of risk-bearing entities Does not apply to actuaries regarding reserves such as policy reserves, premium reserves, or claim settlement expense reserves Applies to the actuary only with respect to incurred claim estimates that are communicated as an actuarial finding

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ASOP 5 Overview - Section 1

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ASOP 5 Overview - Section 1

Examples 1. Appraisals 2. Cash Flow Testing 3. Financial Analysis, Projections, Reserving, Reporting 4. Group Benefits 5. Product Development, Ratemaking, Pricing 6. Regulatory Filings 7. Reinsurance 8. Social Insurance

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ASOP 5 Overview - Section 1

Examples 1. Appraisals 2. Experience Studies 3. Financial Analysis, Projections, Reserving, Reporting 4. Investment-Related Activities 5. Product Development, Pricing

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ASOP 5 Overview - Section 1

Examples 1. Financial Analysis and Valuation Services 2. Social Insurance 3. Due Diligence

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ASOP 5 Overview - Section 3

Considerations for Estimating Incurred Claims: 1. Health Benefit Plan Provisions and Business Practices 2. Economic and Other External Influences 3. Behavior of Claimants 4. Organizational Claims Administration 5. Claim Seasonality 6. Credibility 7. Risk Characteristics and Organizational Practices 8. Legislative Requirements 9. Carve-Outs

• 10. Special LTC Considerations

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ASOP 5 Overview - Section 3

Analysis of Incurred Claims Considerations: 1. Categories of Incurred Claims 2. Reinsurance 3. Large Claims 4. COB 5. Provider Contractual Arrangements

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ASOP 5 Overview - Section 3

Methods for Estimating Incurred Claims 1. Development Method 2. Projection Methods 3. Tabular Method

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ASOP 5 Overview - Section 4

Communications

• Important Dates
• Limitations
• Uncertainties
• PAD
• Provider Insolvency Risk
• Follow-up Studies
• Changes in Assumptions,

Procedures, Methods, Models

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