1. (1) The actuarial opinion required by ORS 750.315 and 750.325 to be submitted annually must meet the requirements of this rule. The annual statement of a multiple employer welfare arrangement must include a certification prepared according to the requirements of this rule. Attached to page 1 of the annual statement must be the statement of a qualified actuary setting forth the opinion of the actuary relating to loss reserves, provision for experience rating refunds and any other actuarial items.
2. (2) An applicant for a certificate of multiple employer welfare arrangement must submit an actuarial opinion meeting the requirements of this rule in order to satisfy ORS 750.305(8) which requires proof of adequate reserves according to the requirements of 750.315 to be submitted to the Director along with the application for the certificate of multiple employer welfare arrangement and other supporting materials. The actuarial opinion must be the statement of a qualified actuary setting forth the opinion of the actuary relating to loss reserves, provision for experience rating refunds and any other actuarial items.
3. (3) For purposes of this rule, a qualified actuary means a member in good standing of the American Academy of Actuaries, or a person recognized by the American Academy of Actuaries as qualified for such an actuarial valuation, or a person who otherwise has demonstrated competency in such an actuarial evaluation to the satisfaction of the Director.
4. (4) The statement of the actuary’s opinion must consist of a paragraph identifying the actuary, a scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the actuary’s work as provided in sections (7) to (9) of this rule, and an opinion paragraph expressing the opinion of the actuary with respect to such subjects as provided in sections (10) to (12) of this rule. The actuary may include one or more additional paragraphs in individual cases if the actuary considers it necessary to state a qualification of opinion or to explain some aspect of the annual statement that is not already sufficiently explained in the annual statement.

5. (5) The opening paragraph of the statement of opinion must generally indicate the relationship of the actuary to the multiple employer welfare arrangement as follows:

   1. (a) For an actuary who is an employee of the multiple employer welfare arrangement, the opening paragraph of the opinion must contain a sentence such as:

      “I, (name and title of actuary), am an officer (employee) of the trust carrying on the business of (name of multiple welfare arrangement) and a member of the American Academy of Actuaries”;

   2. (b) For a consulting actuary, the opening paragraph of the statement of opinion must contain a sentence such as:

      “I, (name and title of consultant), am associated with the firm of (name of firm). I am a member of the American Academy of Actuaries and have been retained by the trust carrying on the business of (name of the multiple employer welfare arrangement) with regard to loss reserves, actuarial liabilities and related items”;

   3. (c) For a person other than a member of the American Academy of Actuaries, the opening paragraph of the opinion must contain a sentence such as:

      1. (A)

         “I, (name and title), am an officer (employee) of the trust carrying on the business of (name of the multiple employer welfare arrangement) and I (SELECT ONE:) (have competency in actuarial valuations for organizations of this kind) — or — (am recognized by the American Academy of Actuaries as qualified to perform actuarial valuations for organizations of this kind)”; or

      2. (B)

         “I, (name and title of consultant), am associated with the firm of (name of firm). I (SELECT ONE:) (have competency in actuarial valuations for organizations of this kind) — or — (am recognized by the American Academy of Actuaries as qualified to perform actuarial valuations for organizations of this kind) and have been retained by the trust carrying on the business of (name of multiple employer welfare arrangement) with regard to the valuation.”

6. (6) Sections (7) to (11) and (13) are examples, for illustrative purposes, of language that in typical circumstances would be included in the remainder of the statement of opinion. The illustrative language must be modified as needed to meet the circumstances of a particular case. The actuary must in any case use language that clearly expresses the professional judgment of the actuary.

7. (7) The scope paragraph:

   1. (a) Must contain a sentence such as the following:

      “I have examined the assumptions and methods used in determining loss reserves, actuarial liabilities and related items listed below, as shown in the annual statement of the organization as prepared for filing with state regulatory officials as of December 31, 19__.”

   2. (b) Must list those items and amounts with respect to which the actuary is expressing an opinion. The list must include but need not be limited to:

      1. (A) Claims unpaid. Anticipated salvage and subrogation included as a reduction to Loss Reserves as reported in Underwriting and Investment Exhibit, and on Page 3 — Liabilities, Surplus and Special Funds, Line 1 $________;
      2. (B) Other actuarial liabilities. (Opinion, under this Item, with respect to actuarial liabilities, if any); and
      3. (C) Premium items, such as receivables, due and unpaid, unearned, and paid in advance as they may relate to actuarial items.

8. (8) If the actuary has examined the underlying records or summaries, or both, the scope paragraph must also include a sentence such as the following:

   “My examination included such review of the assumptions and methods used and of the underlying basic records or summaries, or both, and such tests and calculations as I considered necessary.”

9. (9) If the actuary has not examined the underlying records or summaries, or both, but has relied upon those prepared by the trust carrying on the business of the multiple employer welfare arrangement, the scope paragraph must include a sentence such as one of the following:

   1. (a)

      “I relied upon underlying records or summaries, or both, prepared by the responsible officers or employees of the organizations. In other respects, my examination included such review of the assumptions and methods used and such tests of the calculations as I considered necessary”;

   2. (b)

      “I relied upon (name of firm) for the accuracy of the underlying records or summaries, or both. In other respects, my examination included such review of the underlying assumptions and methods used and such tests of the calculations as I considered necessary.”

10. (10) The opinion paragraph must include a sentence the covers at least the points listed in the following illustration:

    “In my opinion, the amounts carried in the balance sheet on account of the items identified above:

    “Are in accordance with accepted actuarial standards consistently applied and are fairly stated in accordance with sound actuarial principles,

    “Are based on actuarial assumptions relevant to contract provisions and appropriate to the purpose for which the statement was prepared,

    “Meet the requirements of the laws of (state of domicile),

    “Make a good and sufficient provision for all unpaid claims and other actuarial liabilities of the organization under the terms of its contracts and agreements,

    “Are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year-end,

    “Include appropriate provision for all actuarial items that ought to be established.”

11. (11) If there has been any material change in the assumptions or methods, or both, from those previously employed, that change must be described in the statement of opinion by inserting a phrase such as:

    “A material change in assumptions (or methods, or both) was made during the past year but the change accords with accepted actuarial standards.”

    A brief description of the change must follow. The adoption of new coverages requiring underlying assumptions that differ from assumptions used for prior coverages is not a change in assumption for purposes of this section.

12. (12) If the actuary is unable to form an opinion, the actuary must refuse to issue a statement of opinion. If the opinion is adverse of qualified, the actuary must issue an adverse or qualified opinion explicitly stating the reason or reasons for the opinion.

13. (13) If the actuary does not express an opinion as to the accuracy and completeness of underlying listings or summaries used in the evaluation of the actuary, there should be included on or attached to page 1 of the statement blank the statement of an officer or trustee of the trust or an accounting firm that prepared the underlying data similar to the following:

    “I (name of officer or trustee of trust), (title of officer or trustee), of (name and address of trust), (or accounting firm), hereby affirm that the listing and summaries of data prepared for and submitted to (name of actuary) were prepared under my direction and, to the best of my knowledge and believe, are accurate and complete.”

Statutory/Other Authority

ORS 750.305, 750.315 & 75.0325

Statutes/Other Implemented

ORS 750.315(2)

History

ID 3-1994, f. & cert. ef. 4-1-94
ID 11-1993(Temp), f. & cert. ef. 11-17-93