EXAM 6 TIA NOTE CARDS SAO
QUESTIONS AND VERIFIED
ANSWERS|100% CORRECT|GRADE A+
3 main purposes of the SAO - ANSWER 1. State the actuary's opinion about the reasonableness of the
insurer's reserves specified within the Scope of the SAO
2. Notify the stakeholders about significant risks & uncertainties that may impact the reserves
3. Disclose whether the risks could produce significant material adverse deviation
Requirements to be a "qualified actuary": - ANSWER *these standards are promulgated by AAA, not
CAS*
• member in good standing with the CAS; or
• a member in good standing with the AAA, and who has been approved as qualified for signing casualty
loss reserve opinions by the Casualty Practice Council of the AAA
List the requirements from the general standards of AAA's Qualification Standards for Actuaries issuing
SAOs: - ANSWER • MAAA, FCAS, ACAS, or fully qualified member of another IAA member organization;
and
• 3 years of responsible actuarial experience; and
• Knowledge of applicable law (via exams or documented professional development); and
• Either:
- attained highest possible level of membership in an IAA organization and have 1 year or responsible
actuarial experience in the relevant area under the review of an
actuary qualified to issue an SAO - have a minimum of 3 years of responsible experience under the
review of an actuary qualified to issue the SAO
• 30 hours of relevant continuing education
List the requirements from the standards specific to the SAO from AAA's Qualification Standards for
Actuaries issuing SAOs: - ANSWER • Either:
- successfully completed exams administered by the AAA or CAS certain topics
- obtain a signed statement from another actuary who is qualified to issue an SAO that states that the
actuary has obtained sufficient alternative education to satisfy the basic educational requirement for the
specific qualification standard
, • At least 3 years of responsible experience related to the subject of the SAO under the review of an
actuary qualified to issue the SAO
• 15 CE (Continuing Education) hours per year related directly to the particular topic
• At least 6 CE hours per year of "organized" activities related directly to the topic
What does the insurer need to provide to the Commissioner within 5 days of the appointment of the
actuary - ANSWER • Name & title
• Manner of appointment of the actuary
• Statement that the person meets the requirements to be a qualified actuary
What does the insurer need to do if the actuary is replaced: - ANSWER • notify the Insurance
Department within five days
• within ten days, provide an additional letter to the Commissioner stating whether in the 24months
prior to the actuary being replaced, were there any disagreements with the actuary regarding the risk of
material adverse deviation; required disclosures; scopes; procedures or data quality.
• request in writing to the former actuary whether he/she agrees with the statements in the
aforementioned letter. This letter from the actuary should be forwarded to the Commissioner together
with the insurer's letter.
4 exemptions from producing SAO - ANSWER 1. small companies
2. *insurers under supervision or conservatorship (or In liquidation or receivership)*
3. nature of the business
4. financial hardship
Requirement for the "small company" exemption - ANSWER Insurers with under $1M of total direct &
assumed premiums written in a CY, and under $1M total direct & assumed loss & LAE reserves at year
end
Requirement for the "financial hardship" exemption - ANSWER If the projected reasonable cost of the
actuarial opinion would exceed the lesser of:
• 1% of the insurer's capital & surplus from the *latest quarterly statement* (no need: of the year for
which the exemption is sought)
• 3% of the direct & assumed premiums *during the year* for which the exemption is sought
QUESTIONS AND VERIFIED
ANSWERS|100% CORRECT|GRADE A+
3 main purposes of the SAO - ANSWER 1. State the actuary's opinion about the reasonableness of the
insurer's reserves specified within the Scope of the SAO
2. Notify the stakeholders about significant risks & uncertainties that may impact the reserves
3. Disclose whether the risks could produce significant material adverse deviation
Requirements to be a "qualified actuary": - ANSWER *these standards are promulgated by AAA, not
CAS*
• member in good standing with the CAS; or
• a member in good standing with the AAA, and who has been approved as qualified for signing casualty
loss reserve opinions by the Casualty Practice Council of the AAA
List the requirements from the general standards of AAA's Qualification Standards for Actuaries issuing
SAOs: - ANSWER • MAAA, FCAS, ACAS, or fully qualified member of another IAA member organization;
and
• 3 years of responsible actuarial experience; and
• Knowledge of applicable law (via exams or documented professional development); and
• Either:
- attained highest possible level of membership in an IAA organization and have 1 year or responsible
actuarial experience in the relevant area under the review of an
actuary qualified to issue an SAO - have a minimum of 3 years of responsible experience under the
review of an actuary qualified to issue the SAO
• 30 hours of relevant continuing education
List the requirements from the standards specific to the SAO from AAA's Qualification Standards for
Actuaries issuing SAOs: - ANSWER • Either:
- successfully completed exams administered by the AAA or CAS certain topics
- obtain a signed statement from another actuary who is qualified to issue an SAO that states that the
actuary has obtained sufficient alternative education to satisfy the basic educational requirement for the
specific qualification standard
, • At least 3 years of responsible experience related to the subject of the SAO under the review of an
actuary qualified to issue the SAO
• 15 CE (Continuing Education) hours per year related directly to the particular topic
• At least 6 CE hours per year of "organized" activities related directly to the topic
What does the insurer need to provide to the Commissioner within 5 days of the appointment of the
actuary - ANSWER • Name & title
• Manner of appointment of the actuary
• Statement that the person meets the requirements to be a qualified actuary
What does the insurer need to do if the actuary is replaced: - ANSWER • notify the Insurance
Department within five days
• within ten days, provide an additional letter to the Commissioner stating whether in the 24months
prior to the actuary being replaced, were there any disagreements with the actuary regarding the risk of
material adverse deviation; required disclosures; scopes; procedures or data quality.
• request in writing to the former actuary whether he/she agrees with the statements in the
aforementioned letter. This letter from the actuary should be forwarded to the Commissioner together
with the insurer's letter.
4 exemptions from producing SAO - ANSWER 1. small companies
2. *insurers under supervision or conservatorship (or In liquidation or receivership)*
3. nature of the business
4. financial hardship
Requirement for the "small company" exemption - ANSWER Insurers with under $1M of total direct &
assumed premiums written in a CY, and under $1M total direct & assumed loss & LAE reserves at year
end
Requirement for the "financial hardship" exemption - ANSWER If the projected reasonable cost of the
actuarial opinion would exceed the lesser of:
• 1% of the insurer's capital & surplus from the *latest quarterly statement* (no need: of the year for
which the exemption is sought)
• 3% of the direct & assumed premiums *during the year* for which the exemption is sought
