Statutory Reserve Reports and Opinions Working Party report

Document description

This year, much more effort has been concentrated on what needs to be done and associated professional issues. Clearly, normal Institute standards apply but included in the attached paper is a detailed description of accounting procedures. This is of particular relevance in the area of restricted access to information which would lead to a qualified opinion. Other issues include inadequate data. We also covered the question of practising certificates and current practice in other areas. We have not attempted to make recommendations; merely to lay out the arguments. We have taken as our brief an opinion on claims reserving rather than an opinion on the financial condition of a company. In general, we would have a preference for opining net of reinsurance as some smaller companies might not have a sufficient spread of business for stability at the gross level. One of the issues on which actuaries could opine is the bad debt provision. Another working party is reporting on this. We have also highlighted claims reserving areas and techniques where we feel more documentation is required in the UK literature. Our aim has been to assemble sufficient information to allow the profession to form its views as to how to proceed. We could have produced a draft guidance note but it should be noted that, at the time of going to press, it is anticipated that draft guidance notes will shortly be available from the Institute for both the UK and US Lloyd's Opinions. Consequently, the Working Party has done less work on this than would otherwise have been the case as it would merely have duplicated the effort. It is of fundamental importance that these issues be debated by the profession so that a consensus can be formed and the profession can proceed on a united front. We would therefore very much welcome input and comment.