ASOP.43

Reading: “Actuarial Standard of Practice No. 43, Property/Casualty Unpaid Claim Estimates,” June 2007,

Author: Actuarial Standards Board of the American Academy of Actuaries

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ASOP 43 provides guidance to actuaries when performing professional services relating to the estimation of loss and loss adjustment expense for unpaid claims for property/casualty coverages.

BA Quick-Summary: ASOP 43 - Unpaid Claim Estimates ASOP No. 43 provides guidance to actuaries for estimating unpaid claims for property/casualty coverages. It details the purpose and scope of these estimates, outlines definitions such as actuarial central estimate, and discusses the methods, models, and assumptions used in the analysis. ASOP 43 also emphasizes the importance of considering factors like: data quality, external conditions, and uncertainties

Study Tips

There are 4 ASOPs: (Virtually all of the material in the ASOPs is included in higher-ranked readings.)

• ASOP.20 (Discounting)
• ASOP.36 (SAO)
• ASOP.41 (Communications)
• ASOP.43 (Reserve Estimates).

Estimated study time: 30 minutes (not including subsequent review time)

BattleTable

• this reading has not been tested on any exam from the year 2012 to Fall 2019, after which exams stopped being published.

reference	part (a)	part (b)	part (c)	part (d)
no prior questions

In Plain English!

The quiz covers items the AA must identify regarding unpaid claims estimates, factors that should be considered when selecting a methodology, and required disclosures within the report.

Question: identify specific items the AA must IDENTIFY regarding the unpaid claim estimate. [Hint: clms-RED]

• clms (obvious!)

- claims covered (line, state, …)

• Reinsurance:

- net/gross basis, uncollectability risk

• Expenses

- types of unpaid adjustment expenses included in loss estimate

• Discounting:

- does estimate include discounting?

Question: identify specific factors the AA should CONSIDER when selecting a reserving method [Hint: PaNDA (the first "a" doesn't stand for anything)]

• Purpose of analysis

- internal or external use

• Nature of claims
• Data availability
• Assumptions underlying methods – appropriate?

Question: identify specific items the AA should DISCLOSE regarding the unpaid claim estimate [Hint: PAR

• Purpose & scope of analysis
• Accounting date, valuation date, review date
• RMAD: sources of risks, significant events

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