CAS Actuarial Standards & Ethical Guidelines 3 — Questions and Answers
Question 1: Under ASOP No. 36 (Statement of Actuarial Opinion for Property and Casualty Loss and Loss Adjustment Expense Reserves), the appointed actuary's opinion covers reserves as of:
- The statement date specified in the opinion (Correct answer)
- The end of the prior calendar year only
- All future accident years combined
- Any date the insurer's management selects
Correct answer: The statement date specified in the opinion
ASOP No. 36 requires the opinion to pertain to reserves as of the specific statement date identified in the actuarial opinion.
Question 2: A 'qualified actuary' for purposes of signing the NAIC Annual Statement actuarial opinion must be a member in good standing of which organization?
- The Casualty Actuarial Society or the American Academy of Actuaries meeting P&C qualifications (Correct answer)
- Only the Casualty Actuarial Society
- The Society of Actuaries with a P&C track
- Any internationally recognized actuarial body
Correct answer: The Casualty Actuarial Society or the American Academy of Actuaries meeting P&C qualifications
The NAIC requires the signing actuary to be a member of the CAS or an AAA member meeting the P&C qualification standards.
Question 3: Under the CAS continuing education requirements, what is the minimum number of continuing education (CE) hours required for a Fellow of the CAS in a two-year period?
- 30 hours (Correct answer)
- 15 hours
- 60 hours
- 20 hours
Correct answer: 30 hours
CAS Fellows must complete at least 30 CE hours every two-year period to maintain compliance with professionalism requirements.
Question 4: Which ASOP most directly governs an actuary performing a ratemaking analysis for a personal automobile insurer?
- ASOP No. 13 (Trending Procedures in Property/Casualty Insurance) (Correct answer)
- ASOP No. 25 (Credibility Procedures)
- ASOP No. 41 (Actuarial Communications)
- ASOP No. 36 (Statement of Actuarial Opinion)
Correct answer: ASOP No. 13 (Trending Procedures in Property/Casualty Insurance)
ASOP No. 13 specifically addresses trending procedures used in property/casualty ratemaking, making it most directly applicable.
Question 5: The concept of 'materiality' in actuarial standards primarily means that an item or assumption is material if:
- Its omission or misstatement would likely influence the decisions of intended users (Correct answer)
- It results in a reserve change exceeding 5% of surplus
- It is required to be disclosed by statute
- It affects the actuary's professional liability exposure
Correct answer: Its omission or misstatement would likely influence the decisions of intended users
Materiality is defined by the potential influence on intended users' decisions, not by a fixed dollar threshold.
Question 6: An actuary who believes a principal is engaging in illegal activity is generally permitted to disclose confidential information under the CAS Code in which scenario?
- When required by applicable law or when necessary to prevent a significant harm to the public (Correct answer)
- Whenever the actuary personally judges the activity to be unethical
- Only after receiving written permission from the client
- Never; confidentiality is absolute under the Code
Correct answer: When required by applicable law or when necessary to prevent a significant harm to the public
The Code permits disclosure of confidential information when legally required or when necessary to prevent significant public harm.
Question 7: Which of the following best describes the 'scope' section required in an actuarial report under ASOP No. 41?
- A statement of the tasks performed and the extent of the actuary's responsibility (Correct answer)
- A detailed biography of all actuaries who contributed to the analysis
- A list of all data sources regardless of their materiality
- A comparison of the actuary's results to those of competing firms
Correct answer: A statement of the tasks performed and the extent of the actuary's responsibility
The scope section defines what tasks the actuary performed and the boundaries of actuarial responsibility for the work product.
CAS Actuarial Standards & Ethical Guidelines 3
Under ASOP No. 36 (Statement of Actuarial Opinion for Property and Casualty Loss and Loss Adjustment Expense Reserves), the appointed actuary's opinion covers reserves as of: