Some state insurance regulators want to develop a new, multiline definition of the term “qualified actuary.”
The regulators cited questions about the value of long-term care insurance (LTCI) actuarial projections as one example of the need for the project.
In the LTCI sector, one trade group representative “recently made the statement in a public forum that company actuaries were not providing their best estimate assumptions to regulators for [LTCI] rate filings, but only information that would support their rate requests,” the regulators said in a discussion draft.
“Could it be that the appointed actuaries for these companies have similarly failed to take into account the assumptions needed to properly reserve for these products?” the regulators asked. “Anecdotal evidence suggests that some appointed actuaries exploit the vagueness of certain reserve requirements to avoid setting up needed reserves for [LTCI] business.”
Similar issues have cropped up in connection with the Medicare supplement business, the appraisals of blocks of insurance business, and the valuation of public pension plans, the regulators said.
The regulators are part of the Joint Qualified Actuary Subgroup at the National Association of Insurance Commissioners (NAIC).
The NAIC’s life, health and casualty actuarial panels created the subgroup and asked it to recommend a uniform definition of “qualified actuary.”
The subgroup also is supposed to recommend a definition of “inappropriate” or “unprofessional” actuarial work and recommend a process for taking action against inappropriate work.
The Health Actuarial Task Force included the discussion draft in a packet of materials prepared for the NAIC’s summer meeting in Indianapolis.
In the discussion group, the subgroup said advocates for the NAIC taking action on the issue believe that “the regulatory community and the actuarial profession as a whole have different interests.”
Regulators keep some activities confidential, for example, but “the general theme is that the public has a right to know,” the subgroup said.
The actuaries’ disciplinary body keeps most of its activities confidential, the subgroup said.
In addition, “the simplest evidence of different interests relates to employment,” the subgroup said. “It is not a far-fetched assertion that an individual is highly likely to work to advance the interests of his or her employer or principal.”