CAA CAA Actuarial Practice & Regulation 2

Question 1

What does 'materiality' mean when an actuary is deciding whether to disclose a limitation in their work?

Accepted Answer

Whether the item could reasonably be expected to influence the decisions of users of the actuarial work product

Answer

Whether the item is physically large

Answer

Whether the item exceeds a statutory dollar threshold

Answer

Whether the item appears on the balance sheet

Question 2

Which of the following best describes the role of a 'Signing Actuary' on a US insurance company's annual statement?

Accepted Answer

A qualified actuary who takes professional responsibility for the actuarial opinion on reserve adequacy

Answer

An actuary who signs off on IT security audits

Answer

A government regulator overseeing reserve levels

Answer

An external auditor from a public accounting firm

Question 3

What is the key distinction between 'best estimate' reserves and 'reserve margins' in actuarial reserving?

Accepted Answer

Best estimate reserves represent the mean expected outcome; reserve margins add a layer of prudence above the best estimate

Answer

Best estimate reserves include risk margins; reserve margins are always zero

Answer

Best estimate reserves are only used for life insurance; reserve margins for general insurance

Answer

There is no distinction; the terms are interchangeable

Question 4

Under the US National Association of Insurance Commissioners (NAIC) framework, what does the 'Risk-Based Capital' (RBC) system primarily assess?

Accepted Answer

The minimum capital an insurer must hold relative to the risks it faces

Answer

The profitability of an insurer's investment portfolio

Answer

The maximum premium an insurer may charge policyholders

Answer

The number of licensed agents an insurer may employ

Question 5

What is meant by 'loss development' in property and casualty actuarial reserving?

Accepted Answer

The change in reported claim amounts over time as additional information becomes available

Answer

The process of marketing new insurance products

Answer

The reduction in premium rates due to competition

Answer

The actuarial adjustment for investment income on reserves

Question 6

Which ASOP specifically governs the selection of economic assumptions for measuring pension obligations?

Accepted Answer

ASOP No. 27

Answer

ASOP No. 4

Answer

ASOP No. 35

Answer

ASOP No. 25