Description: This paper proposes a hypothesis that the negative public policy implications of durational rating strategies in the medical insurance market are caused by lack of prefunding of durational deterioration of experience and constitute a failure to maintain an important part of the original insuring promise. To solve the problem, a practical and simple reserving basis is proposed as a regulatory standard. Discussions of this paper are included.

Description: This session discusses activities of the AAA with respect to financial reporting and actuarial opinions, related emerging legislation [Sarbanes-Oxley], FAS 141 & 142 [business combinations], and liability determination. From the Record of the Society of Actuaries, Volume 28, No. 3, Session 25