Illustration Actuary Corner

“Illustration Actuary Work, Part One” Vodcast: In part one of this vodcast, Mark Rowley, FSA, MAAA, and Mark DeVries, FSA, MAAA, CERA, discuss introductory concepts about illustration actuary work: asset shares, projecting cash surrender values, reference material, and the concept of a scale in illustration actuary testing.

• Notes

“Illustration Actuary Work, Part Two” Vodcast: In part two of this vodcast, Mark Rowley, FSA, MAAA, and Mark DeVries, FSA, MAAA, CERA, discuss assumptions, assumption governance, model governance, and testing for new sales in illustration actuary work.

• Notes

“Illustration Actuary Work, Part Three” Vodcast: In part three of this vodcast, Mark Rowley, FSA, MAAA, and Mark DeVries, FSA, MAAA, CERA, discuss testing for in-force business, and how to handle difficult situations in illustration actuary work.

• Notes

“Doing Illustration Actuary Testing Over The Life Of A Policy”: In this September 2020 SmallTalk article, Mark Rowley, FSA, MAAA discusses scales, experience, testing, and how testing is required over the life of a policy.

“Assumption Governance and Setting Assumptions In Illustration Actuary Testing”: In this March 2021 SmallTalk article, Mark Rowley, FSA, MAAA discusses elements of assumption setting and assumption governance specific to illustration actuary testing.

“The Current Challenges of Illustration Actuary Testing” Webcast: In this June 2020 webcast, we talk about scales, testing, assumptions, accumulated policy cash flows, model governance, non-guaranteed elements, difficult situations, and indexed universal life (actuarial guideline 49).

Illustration Actuary ASOPs and Regulation

• The Life Insurance Illustrations Model Regulation (Model #582) – This is the Model Regulation that the NAIC passed a number of years ago. It sets the high level rules that need to be followed, which are interpreted by the other references below.

• ASOP No. 24 — The Actuarial Standards Board provides information on ASOP No. 24, “Compliance with the NAIC Life Insurance Illustration Model Regulation.”

• Life Insurance Illustrations: Application of the NAIC Life Insurance Illustrations Model Regulation and Actuarial Standard of Practice No. 24 – A Public Policy Practice Note developed by the Life Illustrations Work Group of the American Academy of Actuaries.

• ASOP No. 2 — The Actuarial Standards Board provides information on ASOP No. 2, “Nonguaranteed Charges or Benefits for Life Insurance Policies and Annuity Contracts.” This is important to illustration actuary work since it is the nonguaranteed charges or benefits that make up the scales tested in illustration actuary testing.

• ASOP No. 12 — The Actuarial Standards Board provides information on ASOP No. 12, “Risk Classification.” This is important to illustration actuary work because the assumptions used in testing usually vary by how risks are classified.

• ASOP No. 15 — The Actuarial Standards Board provides information on ASOP No. 15, “Dividends for Individual Participating Life Insurance, Annuities, and Disability Insurance.” This is important to illustration actuary work because dividends are an example of a non-guaranteed element that have to be tested.

• ASOP No. 23 — The Actuarial Standards Board provides information on ASOP No. 23, “Data Quality.” This is important to illustration actuary work because the testing is only as good as the quality of the data.

• ASOP No. 41 — The Actuarial Standards Board provides information on ASOP No. 41, “Actuarial Communications.” This is important to illustration actuary work because there are a lot of communications involved in doing illustration actuary work.

• ASOP No. 56 — The Actuarial Standards Board provides information on ASOP No. 56, “Modeling.” This is important to illustration actuary work because there is a lot of modeling needed to do illustration actuary testing.