ASOP13.Trend
Reading: Actuarial Standard of Practice No. 13, Trending Procedures in Property/Casualty Insurance
Contents
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Study Tips
ASOPs generally have these sections:
- Section 1. Purpose, Scope, Cross References, and Effective Date
- Section 2. Definitions
- Section 3. Analysis of Issues and Recommended Practices
- Section 4. Communications and Disclosures
- Appendices
Sections 3 & 4 contain most of the relevant information. The definitions in Section 2 are usually obvious and familiar, and are covered in either the Werner of Friedland source texts anyway. You can skip Section 1 and the Appendices. The appendices usually contain either very general background information or comments on the draft version of the ASOP.
Estimated Study Time: 30 minutes (you may occasionally refer back to this ASOP while studying the main pricing and reserving material)
BattleTable
- this reading has not been tested on any exam from the year 2012 and subsequent
reference part (a) part (b) part (c) part (d) no prior questions
In Plain English!
Section 2: Definitions
The 6 terms defined in this sections are: coverage, experience period, forecast period, societal influences, trending period, trending procedure. The only one that may not be obvious is societal influences.
societal influences: refers to the impact on costs of changes in [1] claim consciousness [2] court practices [3] legal precedents [4] other non-economic factors
Section 3: Analysis of Issues and Recommended Practices
Section 4: Communications and Disclosures
This section on communications & disclosures is largely common sense. Regarding the trend analysis, the actuary should communicate information that may have a material impact on the user's interpretation. Examples of such items include but aren't limited to:
- intended user
- significant adjustments to the data
- limitations imposed by particular laws (the actuary may have wanted to analyze trends using different methods but could not because of various laws & regulations)
- reliance on other sources
Note that many of these same considerations apply to actuarial communications in general.
