Opinion - Qualified v No Opinion

I'm having a bit of difficulty distinguishing between when the opinion type should be qualified v no opinion. Is it true that the opinion will always be qualified if you only have partial data (i.e., reserve data on 1 LOB but not on the other)? Is it true that the opinion will always be no opinion if data/analysis/assumptions are deficient/limited (i.e., in the case of a new LOB)?

To me there appears be a certain amount of overlap between the 2 opinion types as partial data (i.e. reserve data on 1 LOB but not on the other) could fall either in qualified or no opinion?

Comments

  • edited February 2021

    Sometimes it's very clear which of the 5 options the opinion should be (reasonable, inadequate, excessive, qualified, or none) but sometimes it isn't. There are situations where the actuary must exercise judgment and 2 different actuaries might come to different conclusions. Some of these considerations are provided in the COPLFR text in sections 4.5.1 and 4.6.1 It's difficult to answer your questions in general because there could be other important pieces of information that could affect the final opinion.

    Let's take your first question: Is it true that the opinion will always be qualified if you only have partial data (i.e., reserve data on 1 LOB but not on the other)?

    • The opinion would likely be "qualified" if the missing data was material. But if the missing data was for a line of business that was not considered material, the opinion could still be reasonable/inadequate/excessive. I don't think you would say "no opinion".

    Your second question: Is it true that the opinion will always be no opinion if data/analysis/assumptions are deficient/limited (i.e., in the case of a new LOB)?

    • I want to say you are correct but I should elaborate. The way I think about it is like this: Unless you have no data at all, you can always make assumptions to fill in the gaps and arrive at some sort of final answer. Maybe you can use data from a related line or from industry. If you had to make a lot of assumptions, and your final answer has a huge range, then I would still probably conclude "no opinion". But if through careful reasoning, you felt your final answer was reliable then you could give a different opinion.

    I hope that helps. You may have already looked at 2014.Fall Q20 but if not, that's a good problem for understanding types of opinion. And remember that you can always go to this wiki page:

    then use control-f to search for the word "opinion". This will show you all the SAO exam problems that involved the actuarial opinion. Going over these old problems will solidify your understanding of this topic.

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