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The Actuarial Standards Board - An Update

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By Dave Pelletier, FCIA

This article is an update of activity of the Actuarial Standards Board (ASB) since my previous report for the (e)Bulletin last October.

Approved Final Standard

Readers may recall that in the last article I had reported on five new or revised final standards that had been approved since the preceding one. Our pace with respect to final standard approval has slowed somewhat, and there’s just one to report on this time.

Thanks to some persistent effort by Shams Munir and his designated group during 2011, the ASB was able to approve the final Standard of Practice on Ratemaking for Property and Casualty Insurance. The original notice of intent had been issued in June of 2008, and we were glad to finally bring closure to this new standard. It became effective on January 1, 2012.

Exposure Draft

One exposure draft has been approved for publication since October, dealing with a substantial revision of part 6000 on post-employment benefit plans, and is due to be published shortly.  The designated group, chaired by Ellen Whelan, looks forward to comments on it; the comment deadline is April 30, 2012.

Notices of Intent

Since October, we’ve issued two notices of intent. The first dealt with a proposed standard on life insurance costing, analogous to the ratemaking standard just approved for the property and casualty insurance area and drawing on a 2008 research paper on this topic. Jacques Tremblay’s designated group received six sets of comments on the NOI, and will be preparing its recommended course of action for the ASB’s March meeting.

The second deals with insurance dividends. When the Consolidated Standards of Practice (CSOP) were created several years ago, they replaced the former Institute standards, valuation technique papers (VTPs), and recommendations previously in place. However, the "Recommendation" dealing with dividends and an associated explanatory note were never "CSOPped" along with the rest and they technically remain in force. This notice of intent announced the ASB’s intent to repeal these outdated materials and replace them with updates to the standards (coincident also with updated educational notes that would be prepared under the CIA’s Practice Council). Steve Haist and the designated group he chairs look forward to receiving comments on the NOI by the deadline of March 31, 2012. We’re aiming to adopt a final standard by December 1, 2012.

Initial Communication

Where the ASB promulgates the use of particular assumptions, our due process calls for a procedure slightly different from the usual one. It serves notice, at least five months prior to the effective date, of its intent through an "initial communication", inviting comment, followed by a "final communication" of the approved promulgation at least three months before the effective date. In January, we approved an initial communication regarding revised calibration criteria for models used in the valuation of insurers’ segregated fund guarantees, which was published along with a supporting research paper produced by a working group, chaired by Alexis Gerbeau, of the CIA’s CLIFR. The comment deadline is March 31, 2012, and the intended effective date is October 15, 2012.

Other Activity

The ASB continues to be busy with a number of other initiatives, several of which have been mentioned in previous articles.

We received eight sets of thoughtful comments on the proposed revisions to our due process, of which some were in opposite directions. Reflecting these and comments from the Actuarial Standards Oversight Council (ASOC), the ASB discussed further refinements to those revisions, which are intended to be finalized at the March meetings of the ASB and of ASOC.

Richard Gauthier’s designated group on the proposed modelling standard received several comments on its NOI, and is currently considering those comments as it recommends a course of action to the ASB on this area at its May meeting.

Following discussion with the chair of the CIA’s Practice Council, the ASB appointed liaisons to each of the CIA’s practice committees, to facilitate communication in both directions of intended actions.

In the pension area, we have three different areas of activity at the moment. The notice of intent issued last year on hypothetical windup and solvency valuations generated considerable comment, and the ASB expects to issue a revised notice of intent in the coming months. Secondly, a specific issue has arisen with respect to incremental cost and sensitivity disclosures on certain interim valuation reports, and a notice of intent is being prepared by a designated group chaired by Michael Banks, with the intent to move quickly to a revised final standard by the end of the year. Finally, we’ve also created a designated group, chaired by Stephen Butterfield, to determine if there are other issues arising from the revisions to part 3000 introduced in 2010 that require action.

ASB Membership

Stephen Butterfield came to the end of his term on the ASB on December 31, 2011. Stephen has been an excellent and vocal contributor during his time on the ASB, and has helped guide our work with post-employment benefits, with "subsequent events", and in the pension area. Notwithstanding his "retirement" from the ASB, we’re pleased to see his involvement will continue (as evidenced by his chairing the designated group mentioned above!).


Dave Pelletier, FCIA, is Chair of the Actuarial Standards Board.

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