Letter of Representation
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From the source text, section 3.5.3:
- Although not explicitly referenced, nor required, in the NAIC SAO instructions or AOWG Regulatory Guidance, non-employee Appointed Actuaries often request a letter of representation from company management.
Items cited in this could include:
- company-provided complete and accurate data
- information on subsequent events
- basis of carried reserves (net/gross of reinsurance, salvage & subrogation, risk margin,...)
- changes in reserving methodology
The text lists a few other items but I don't think they are important. You look them up if you want but the main idea is that the letter of representation is a document from company management assuring the appointed actuary that they have all the relevant information on which to form an opinion.
Riddle: Why is this document called a "letter of representation".
Answer: I don't know. 😐 Maybe because the company is representing themselves as having provided all the pertinent information?
