CAS Statement of Principles

The CAS Board of Directors agreed to reinstate the Statement of Principles regarding Property and Casualty Insurance Ratemaking (Ratemaking Principles), for reference for U.S.-regulated ratemaking.

Last year, the Board decided to rescind the Statements of Principles related to ratemaking, reserving, and valuation. Following the decision, key stakeholders raised concerns with the Board’s action on the Ratemaking Principles, prompting the Board to seek more information regarding the concerns by inviting feedback.

Stakeholders expressed that the Ratemaking Principles should be reinstated because they are frequently referenced by CAS members to support rate filings, in litigation, and for expert testimony, and they provide a concise and understandable explanation of actuarial ratemaking for non-actuaries and regulators.

In reinstating the Principles for reference for U.S.-regulated ratemaking, the Board acknowledged that actuarial practices differ around the world and that the concerns raised by the rescindment were U.S.-based. All CAS members must adhere to regulations and actuarial standards of practice applicable to their jurisdiction, as well as the CAS Code of Conduct.

The CAS Board appreciates the feedback it has received throughout the process of considering the future of the Ratemaking Principles.

Prior announcements from the CAS:

April 2021:

December 2020:

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tldr; CAS keeps ratemaking principles exciting



Make Actuarial Science Great Again?

Academy Statement Regarding CAS Rescinded Ratemaking Principles

On April 1, 2021, the Casualty Actuarial Society (CAS) posted a statement regarding the CAS board response to member/regulator feedback on the rescinded CAS Statement of Principles on Ratemaking. In this statement, the CAS announced that the CAS board was making a formal request to the American Academy of Actuaries. Specifically, it stated:

“The Board unanimously passed the following motion during its March 27 meeting: That the Board will formally request the American Academy of Actuaries develop a Practice Note on P/C insurance ratemaking to integrate the guidance amongst the various Actuarial Standards of Practice.”
The American Academy of Actuaries (Academy) appreciates that the CAS has worked with and continues to seek to collaborate with the Academy when topics it is faced with potentially pertain to U.S. actuarial guidance and public policy.

Actuarial standards of practice (ASOPs) set the standard for appropriate practice and are binding on the members of the U.S.-based actuarial organizations when rendering actuarial services in the U.S. Each ASOP provides a transmittal memorandum and one or more supporting appendices that may be useful to the actuary in interpreting the standard.1 In contrast, practice notes are not intended to provide interpretations of actuarial standards of practice, nor are they meant to be a codification of generally accepted actuarial practice.2
While only the ASOPs provide professional actuarial guidance, the Academy is committed to developing and promoting a comprehensive body of professionalism resources. A number of resources exist to aid U.S. actuaries when providing actuarial services related to P/C insurance ratemaking. For example, the Academy’s Applicability Guidelines, while not guidance themselves, do suggest which ASOPs may provide guidance relevant to the actuarial services being provided.

The Academy has issued and will continue to produce resources that will be useful to our members, the regulatory community, and the public that touch on P/C insurance ratemaking considerations, such as bias in data, assumptions and models. These resources include:

  1. Big Data and the Role of the Actuary monograph
  2. Comments to regulators and legislators that include discussion of unfair discrimination topics3
  3. Ongoing work on the Academy’s Casualty Practice Council Racial Equity Task Force
  4. Forthcoming Data Science and Analytics Committee issue brief and paper
    We believe that the documents referenced above are just a few that provide valuable resources for actuaries providing P/C insurance ratemaking analyses, and we plan to continue to produce additional publications/work products as deemed appropriate.
    Tom Campbell
    American Academy of Actuaries

I will note that the linked item doesn’t have a date on it, other than it was after April 1, 2021.

Yes, that was a bit embarrassing.

There are multiple problems here, but I will just pick one: both the SOA and CAS sometimes get a bit too U.S.-focused.

To begin with, it annoys the very large Canadian contingent in our orgs. We keep forgetting them, and there’s no excuse for that. Yes, the U.S. is the third largest country by population, and Canada is about a tenth the size, but still.

I am not sure about CAS & its plans for world non-domination (compared to the SOA, where I am well aware of the world-dominating goal), but if one claims to be an international org, remember your non-U.S. members may need the CAS for reasons the U.S. members do not have.