Description: According to the Actuarial Standards Board’s Actuarial Standard of Practice No. 49 (ASOP 49), actuarially sound Medicaid managed care capitation rates will include a provision for underwriting gain in order to provide compensation for the risks assumed by an MCO. However, there is no generally accepted method for quantifying underwriting gain in managed Medicaid capitation rates. This article discusses a new model developed to address this void and calculate underwriting gain. The model was developed by researching existing financial literature and performing a statistical analysis of industry data to build out a framework that can be leveraged to estimate underwriting gain.

Description: In How Significant Is Statistical Significance? The author discusses the p-value that is often used to determine significance. Sometimes we place too much reliance upon canned metrics and lose the ability to notice when something is mathematically sound but not sensible. The article provides three simple examples that require no complicated mathematics to follow yet provide a basis for some deep thought about statistical significance versus substantive significance.

Description: This article is an update, as of March 2019, on Financial Reporting Section sponsored projects in process and those recently completed.

Description: This article describes the upcoming initiative to offer all fellowship-level examinations twice per year. It also provides the recommended order for taking FSA examinations and modules by track.

Description: This article describes the impact of the global acceptance of the SOA’s Chartered Enterprise Risk Analyst credential.

Description: A DC plan design information that could align with organizational goals allowing for benefits for both higher and lower paid employees. It works amazingly easy for 403(b) plans but can also work well with 401(k) plans. You can model the design to see what works best for your organization to ensure passage of nondiscrimination tests and alignment with budget.

Description: This article summarizes the key changes to VM-31 requirements in the 2020 version of the Valuation Manual for both life and variable annuities, and compares and contrasts the requirements for each. In addition, the article offers insights into common issues and recommendations for VM-31 reports from the viewpoints of a regulator, consultant, and company actuary.

Description: Health claims are not normally distributed. Claims Forecasting can be improved by understanding the entire distribution of plausible values of future claims, for example knowing there is an 80% chance future claims are between $340 and $375 PMPM. Confidence intervals around our estimates allow us to understand for each range around the best estimate (for example +/- 1%) what is the probability that future claims will fall in that range. Quantile Regression is a mathematical technique where you can estimate any percentile of the claims distribution you are looking for as a function of demographics, diagnosis indicators, prior cost variables, or other significant predictors. You can see which coefficients are important at different parts of the distribution. Individual and group distributions can be constructed. There are numerous applications in pricing and underwriting, stop loss, provider profiling, ACO target setting, allocation of group risk charges based on volatility, discounting strategy, and experience analysis.

Description: This article discusses the adoption of the AICPA Statement of Position SOP 03-1 altering the way earnings emerge under FAS 97 and the impact of the enactment of SOX control requirements.

Description: An exchange of ideas between David Ingram and Jesse Hobbs about the stages of risk.