Disclosures About Another Actuary's Work
I'm confused about the required disclosures for another actuary's work.
In 2016 Spring 20a, the acceptable answers for disclosures about another actuary's work in the OPINION section are: the name of the actuary, the affiliation of the other actuary, that the AA reviewed the other actuary's work, and the extent of that review.
The wiki (and TIA's outline, for that matter) states that disclosing the other actuary's credential is a required disclosure, but the examiner's report specifically listed the credentials and qualifications as a common incorrect answer.
I referred to the COPLFR reading directly, and found this (page 48 - https://www.actuary.org/files/publications/PC_Loss_Reserve_Practice_Note_2017.pdf)
4.10 Use of the work of another
According to the NAIC Instructions,
"If the Appointed Actuary has made use of the analysis of another actuary not within the
Appointed Actuary’s control (such as for pools and associations, for a subsidiary or for
special lines of business) for a material portion of the reserves, the other actuary must be
identified by name, credential and affiliation within the OPINION paragraph. If the
Appointed Actuary has made use of the work of a non-actuary (such as for modeling) for
a material portion of the reserves, that individual must be identified by name and
affiliation and a description of the type of analysis performed much be provided."4.10.1 Discussion
Section 5 of the Instructions also requires that, if an actuary has used the work of another actuary for a
material portion of the reserves, he or she must provide that other actuary’s name, credentials and
affiliation in the opinion. In 2016 the Instructions were expanded to include the use of the work of a nonactuary, which is consistent with the phraseology in ASOP No. 36.
What gives, CAS? Was that question appealed, or were there changes since 2016 Spring?
Comments
That is a good observation and I have added a footnote to the COPLR BattleTable about it.
Alice the Actuary whispered in my ear that errors in the examiner's reports happen more often than you might think. And the errors are almost never corrected. There are also cases where an acceptable answer for a particular question on a prior exam was then not accepted for the same question on a later exam. But this is difficult to detect because answers are often written very differently, even to the same questions.
Another issue that makes it difficult for people studying is when readings are modified or entirely removed from the syllabus. The consequence is that people waste time and get frustrated at not being able to find the answers to questions from those old readings in the current syllabus. (When you're just learning the material, you have no way of knowing if you just can't find the information or if it really isn't there.) Regarding your COPLFR question, there's no easy way to know whether there was a change to COPLFR since 2016. The current date on COPLFR is 2017, so it's possible something changed. But unless you hunt down the previous version of COPLFR and do a side-by-side comparison, it's impossible to know.
About appeals: The CAS does not make this a transparent process. My guess is that the graders do everything they can to reject an appeal because otherwise they would have to regrade a lot of exams. I suppose there have been appeals that have been accepted but I've never personally know anyone to be successful with an appeal.
Thanks, Graham.
Related question - is this a correct summary about the disclosures about reliance on another actuary's work? Above discrepancy notwithstanding.
in OPINION - name, credentials, and affiliation of other actuary
in SCOPE - Appointed Actuary reviewed the other actuary's work, and the extend of the AA's review
(summary based off 2014 Spring 25b)
I would say yes, basically, but I'd also add Section 5.6 - RELEVANT COMMENTS as a place to mention the issue.
There is a lot of overlap between different sections of the SAO and for many things there isn't tight logic on what goes where. A good exercise for you might be to take all the old exam problems concerning "work of others" and see if you can combine all the answers given in the examiner's reports to one concise answer (possibly consisting of 3 or 4 bullet points) that you can use as a basis whenever a question like this comes up.
Anyway, I reviewed COPLFR myself and here's what I found:
Section 3.9 in the SCOPE section covers this but does not specifically mention "work of others." It is also is not specific to "underwriting pools". It lists 2 options for illustrative language:
The first option is the appropriate option here. The AA looked at the assumptions/methods underlying the company's reserves. Even though there is no specific mention of "work of others", obviously there was someone else involved who did this work. In this case, the AA might not have done an independent analysis, which matches the 2014.Spring Q25b exam problem. There is also no specific mention of pools in the illustrative language. The exam question could have referenced any aspect of the reserves. The key is that the AA didn't do an independent analysis and merely reviewed the assumptions/methods of the other person's work.
The second option for illustrative language would not apply since for this option, COPLFR specifically says the AA did an independent analysis.
For the OPINION section, the disclosure would obviously be in Section 4.10 - Work of Others, with the disclosed information as you listed.
There is also another reference to underwriting pools in Section 5.6 of RELEVANT COMMENTS, so I'd mention it there as well (even though this wasn't listed as part of the answer to 2014.Spring Q25b)