Risk Management and Financial Reporting

The Climate Change Joint Task Force sent comments to the U.S. Department of the Treasury and Federal Insurance Office's (FIO) request for information regarding FIO's future work related to the insurance sector and climate-related financial risks. 

The Data Science and Analytics Committee released a major issue paper, Big Data and Algorithms in Actuarial Modeling and Consumer Impacts. The purpose of this paper is to provide a framing for understanding how developments in big data and artificial intelligence (AI) may impact insurance offerings and their oversight; education for actuaries, regulators, legislators, and other interested stakeholders on the evolving impacts of big data and AI technologies on the oversight, accessibility, and sustainability of insurance since the publication of the Big Data and the Role of the Actuary monograph; and education for a framework on algorithmic accountability and considerations specific across different lines of insurance. Read the news release.

The Long-Duration Contracts Work Group of the Financial Reporting Committee released an exposure draft of a public policy practice note on the Application of Accounting Standards Update 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts. The exposure draft is Part I: Traditional and Limited-Payment Contracts – Basic Considerations Related to the Liability for Future Policy Benefits. Due to the number of areas of practice impacted by this accounting standard, the white paper is being exposed for comment in sections, of which this is the first. Please send comments to rmfrcanalyst@actuary.org by September 30.

RMFRC’s Data Science and Analytics Committee (DSAC) submitted comments in response to a joint request for information and comment from several federal agencies regarding financial institutions’ use of artificial intelligence (AI) and machine learning. The DSAC letter provided actuarial insights into the use of AI in the insurance sector. The agencies making the request are the Office of the Comptroller of the Currency, the Federal Reserve’s Board of Governors, the Federal Deposit Insurance Corporation, the Bureau of Consumer Financial Protection, and the National Credit Union Administration.

The Climate-Related Financial Disclosures Work Group and the Actuaries Climate Index/Actuaries Climate Risk Index Work Group submitted comments to the New York State Department of Financial Services on financial risks related to climate change.

The Climate-Related Financial Disclosures Work Group and the Actuaries Climate Index/Actuaries Climate Risk Index Work Group jointly submitted comments to the Securities and Exchange Commission’s request for public input on climate change disclosures. 

The ERM/ORSA Climate-Related Financial Disclosures Work Group submitted comments to the NAIC Climate and Resilience (EX) Task Force's Climate Risk Disclosure Workstream related to ongoing discussions and work on the Climate Risk Disclosure Survey. 

The ERM/ORSA Climate Risk Disclosures Work Group Chair, Michelle Young, and Academy Assistant Director for Research, Steve Jackson, shared an update to the NAIC Climate Risk and Resiliency (EX) Task Force on the Climate Risk Disclosures Survey Analysis project.

The Solvency Committee submitted comments to the Federal Insurance Office regarding its Study on the Insurance Capital Standard (ICS).

The ERM/ORSA Committee's Climate-Related Financial Disclosures (CRFD) Work Group submitted comments to the International Association of Insurance Supervisors (IAIS) on its Application Paper on the Supervision of Climate-related Risks in the Insurance Sector. 

Academy volunteers presented at the National Council of Insurance Legislators (NCOIL) Annual Meeting during the Special Committee on Race in Insurance Underwriting’s session. Dorothy Andrews, chairperson of the Data Science and Analytics Committee, presented on behalf of the committee and provided an update on its ongoing work relevant to NCOIL’s examination of these issues. Casualty Vice President Lauren Cavanaugh presented on behalf of the Casualty Practice Council, and Mary Bahna-Nolan presented on the issue from a life perspective.

The Financial Reporting Committee and Life Financial Reporting Committee submitted comments to the Financial Accounting Standards Board (FASB) regarding indexing and modco embedded derivatives.

The Financial Reporting Committee submitted comments to the American Institute of Certified Public Accountants (AICPA) regarding Long-Duration Contracts Implementation Issue 11AC (ceded reinsurance), to be included in the Audit and Accounting Guide: Life and Health Insurance Entities.

Steve Jackson, Academy Assistant Director for Research, shared an update on the Scalars Project to the National Association of Insurance Commissioners (NAIC) International Insurance Relations (G) Committee.

The Financial Reporting Committee submitted comments to the American Institute of Certified Public Accountants (AICPA) regarding draft revisions to the Audit and Accounting Guide: Life and Health Insurance Entities.