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App of Professional Standards to AAR
- Valuation of policy liabilities in accordance with AAP
- Meet a standard of care wrt. to the data used in valuations
- Use of the work of others should be disclosed in AAR
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Differences Between AA Valuations and Corresponding Annual Return Liabilities
- If booked policy liabilities differ from APV by >AA's selected standard of materiality, AAR must include a discussion of the reasons for the difference
- Policy liabilities in the liabilities in BS of the Annual Return should be >= corresponding APV by AA
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Situations that lead to reduction in reinsurance recoverable / ceded reserve
- A dispute has arisen with a reinsurer;
- A reinsurance collectible is significantly overdue;
- The reinsurer has a history of not settling accounts promptly;
- Known to have been the subject of regulatory restrictions in its home jurisd
- Poor credit rating.
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AAR - Factors to consider in determining the claims liabilities provision for each LOB
- Significant trends in the severity and frequency of claims,
- Important changes in the coverage of the policies,
- Changes in reinsurance cost and arrangements,
- Changes in the reporting lags of claims and in the claim payment,
- Changes to the loss reserving practices
- The effects of regulatory changes
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AAR - Components of prem liabilities
- Expected losses, LAE and servicing costs on PIF
- Anticipated broker/agent commission,
- Expected adjustments to swing rated policies,
- Expected changes to premiums as a result of audits, late reporting or endorsements
- Expected commission adjustments on policies with variable commissions.
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AAR - Disclosure on DCAT
- To whom DCAT reports were presented (board, audit committee)
- Format of the reports, written or oral
- When was the presentation done
- Date that DCAT reports were signed by AA
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AAR - Disclosure new AA appointment
- Date of appointment,
- Date of resignation of previous AA,
- Date on which OSFI was notified of appointment,
- Confirmation of communication with previous AA
- AA qualifications
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