ASOP 5
(INCURRED HEALTH AND DISABILITY CLAIMS)
SECTION 4
(COMMUNICATIONS AND DISCLOSURES)

Section 4
Communications and Disclosures

ASOP 5 | §4.1 | ACTUARIAL COMMUNICATION

When issuing an actuarial communication subject to this standard, the actuary should consider the intended purpose or use of the incurred claim estimate and refer to ASOP No. 41 for further guidance. The actuary should include the following items, as applicable, in an actuarial communication. This list includes certain pertinent items from ASOP No. 41 as well as additional items.

a. important dates used in the analysis such as the incurral, processing, and valuation dates;

b. significant limitations, if any, that constrained the actuary’s incurred claim estimate analysis such that, in the actuary’s professional judgment, there is a significant risk that a more in-depth analysis would produce a materially different result;

c. specific significant risks and uncertainties, if any, with respect to whether actual results may vary from the incurred claim estimate;

d. any explicit provision for adverse deviation, as described in section 3.31.;

e. the risk that provider insolvency may have a material effect on the risk-bearing entity’s ultimate liability (see section 3.36.);

f. any follow-up studies the actuary may have utilized in the development of the incurred claim estimate, as described in section 3.5; and

g. when updating a previous estimate, changes in assumptions, procedures, methods, or models that the actuary believes to have a material impact on the incurred claim estimate, as well as the reasons for such changes to the extent known by the actuary. The actuary may need to disclose these changes in cases other than when updating a previous estimate, consistent with the purpose or use of the incurred claim estimate. This standard does not require the actuary to measure or quantify the impact of such changes.

ASOP 5 | §4.2 | ADDITIONAL DISCLOSURES

The actuary should also include the following, as applicable, in an actuarial communication:

a. the disclosure in ASOP No. 41, section 4.2, if any material assumption or method was prescribed by applicable law;

b. the disclosure in ASOP No. 41, section 4.3, if the actuary states reliance on other sources and thereby disclaims responsibility for any material assumption or method selected by a party other than the actuary; and

c. the disclosure in ASOP No. 41, section 4.4, if, in the actuary’s professional judgment, the actuary has otherwise deviated materially from the guidance of this ASOP.