Actuarial AUG2015 OF ACTUARIES OF THE AMERICAN ACADEMY THE NEWSMONTHLY Academy Presents at NAIC Summer Meeting CADEMY VOLUNTEERS gave multiple pre- chairperson of the Life Reinsurance Work Group, presented sentations at the NAIC’s Summer 2015 National on Treatment of Yearly Renewable Term Reinsurance in AMeeting in Chicago Aug. 14-17, interacting with Stochastic Exclusion Ratio Testing, while Bahna-Nolan state regulators on a variety of topics, including earth- provided an update on the development of the Guaranteed quake risk, long-term care terminations, life principle- Issue, Simplified Issue, and Preneed mortality tables from based reserving, investment risk-based capital (RBC), and the Academy/SOA Joint Project Oversight Group, and noted actuarial professionalism (see p. 6). that accelerated underwriting is an emerging trend. Mary Bahna-Nolan, vice president for life issues, and John MacBain, a member of the Nonforfeiture Modern- Richard Daillak, a member of the Life Practice Council, ization Work Group, provided an update on activities of the addressed the Life Actuarial (A) Task Force (LATF). Daillak, SEE NAIC, PAGE 11 Academy Releases Series of Papers Marking Medicare’s 50th Anniversary EDICARE TURNED 50 AT THE END OF JULY, Advantage and supplemental policies. and the Academy—which also is marking its 50th The projected long-range financial condition of Medi- Manniversary this year—noted the milestone for care, according to the newly released 2015 Medicare Trust- the federal health care program by releasing several papers ees Report, has improved since last year, primarily due to in the new Medicare@50 series. Enacted on July 30, 1965, a lower estimate for long-range health care cost growth UPDATE with President Lyndon Johnson’s signing of the Social Secu- for the Medicare Hospital Insurance (HI) Trust Fund and rity Amendments of 1965, Medicare became one of the most other parts of Medicare. As indicated in the Academy’s important social insurance programs in our nation’s history. July issue brief, Medicare’s Financial Condition: Beyond Actu- “Medicare has played a critical role in meeting the arial Balance, the HI trust fund will have sufficient funds health care needs of nearly all Americans age 65 and older to cover its obligations until 2030, the same year that was and millions of younger Americans with disabilities,” said projected last year, and 13 years later than was projected in Academy Senior Health Fellow Cori Uccello. “With 10,000 2009, the last report issued prior to passage of the Afford- Americans now enrolling in Medicare every day, it’s more able Care Act. In 2030, tax revenues would cover 86 per- important than ever to take stock of the program. The cent of program costs. Academy’s Medicare@50 series identifies some of the SEE MEDICARE@50, PAGE 15 most fundamental issues that policymakers and anyone concerned with the program’s future should be aware of, NEW SPECIAL DIRECTOR ELECTED such as ‘How serious are Medicare’s financial challenges?’ The Board of Directors this and ‘What benefits does Medicare provide, and to whom?’” month elected former Ohio Part of the Academy’s broader “Aging Securely” initia- Department of Insurance Direc- tive, which focuses on policy issues around longevity risk, tor (2007-11) Mary Jo Hudson health care needs, and financial security for an aging popu- to serve as a special director on lation, Medicare@50’s first three papers are: the Board for a term ending in ➥ Is It Sustainable for 50 More Years? This paper looks the fall of 2016. “I’ve had the at the financial challenges facing Medicare and high- pleasure of working with many actuaries as a regulator, and lights the need for policy options to ensure the pro- Hudson look forward to this new role gram’s long-term sustainability. supporting the important public Who Are the Beneficiaries? ➥ This paper examines the diverse policy and professionalism mission of the Academy,” said needs and characteristics of Medicare beneficiaries. Hudson, a member of the law firm of Bailey Cavalieri LLC ➥ Does It Meet the Needs of the Beneficiaries? This paper in Columbus, Ohio, a legal practice emphasizing multi- explores the benefits available under the traditional state insurance regulatory compliance issues. fee-for-service Medicare program, as well as Medicare 2 2 6 8 Senior Fellow Early-Bird Professionalism: Solvency Committee For P/C Named Annual-Meeting Academy Continues Webinar Looks at Discount Ends Aug. 31 Regulator Outreach Insurance Capital Standards CALENDAR SEPTEMBER 2 Seminar: Vrrm, Vrrm, VM-20 – Start Your Engines, The Race to Academy NEWS Briefs the PBR Finish Line is On! 2 Webinar: Exploring Global Health Care Cost Drivers: Australia and Singapore Academy Names Jim MacGinnitie 9-11 Casualty Loss Reserve Seminar (CLRS) & Workshops, Atlanta Senior P/C Fellow NOVEMBER HE ACADEMY ANNOUNCED Aug. 28 4 Webinar: Exploring Global Health it has named W. James (Jim) MacGinni- Care Cost Drivers: Canada and Chile Ttie, an actuary with more than 50 years of 9-12 Life and Health Qualifications consulting and executive experience in casualty Seminar, Arlington, Va. actuarial and financial issues, to be its first senior 12-13 Academy Annual Meeting and Public Policy Forum and 50th property/casualty fellow. Anniversary Gala, Washington, D.C. He will communicate the Academy’s work on casualty actuarial issues pertaining to cybersecu- DECEMBER rity, extreme weather and catastrophic event risks, 1-2 Seminar on P/C Effective Loss workers’ compensation, medical professional lia- Reserve Opinions, Philadelphia bility, reinsurance, auto insurance, and many more P/C issues to the public and to public policymakers. MacGinnitie MacGinnitie is a past president of the Acad- emy (1988-89), the Casualty Actuarial Society (1979), the Society of Actuaries (2002), and the Since retiring in 1999 after serving for two International Actuarial Association (2003). years as chief financial officer of CNA Finan- “The position of senior property and casualty cial—where he had worked for 12 years early fellow was created in recognition of the impor- in his career—MacGinnitie has served on the tance the Academy places on its role in shaping boards of directors of several insurers, and as sound public policy in the regulation of property an independent arbitrator and consultant. and casualty insurance,” said Academy President From 1994 to 1997, he was a partner and direc- Mary D. Miller. tor of actuarial services at Ernst & Young, founded “Jim brings to this position the ideal attri- the casualty actuarial practice of Tillinghast, serv- butes to make him an effective voice on casualty ing as its managing principal before its merger issues—wide practice experience and depth of with Towers Perrin, now Towers Watson. He also casualty actuarial knowledge, complemented by was Professor of Actuarial Science at the Univer- extensive leadership experience,” she said. sity of Michigan in the mid-1970s. Additional Session Information Released for Academy’s Annual Meeting HE ACADEMY HAS RELEASED new ➥ Climate-change risk, cybersecurity threats, details for the educational sessions at its price optimization, the changing personal TAnnual Meeting and Public Policy Forum, to auto insurance market, and the public policy be held Nov. 12-13 in Washington. Sessions will implications surrounding those issues. offer public policy and professionalism con- ➥ Health care and the 2016 elections, updates on tent relevant to all actuarial areas of practice, Affordable Care Act implementation, payment and practice-specific content on topical casu- and delivery system reform, and long-term care. To continue receiving the alty, health, life, pension practice, and profes- ➥ The latest on life insurance regulation Update and other Academy publications on time, make sionalism issues. Discounted rates are available reforms, including a hypothetical look at “Day sure the Academy has your through Aug. 31—today—so register now. 1” of principle-based reserving (PBR) taking correct contact information. Uniquely positioned and knowledgeable effect, professionalism issues related to PBR, Academy members can subject matter experts leading the sessions will and new requirements for AXXX/XXX cap- update their member profile include congressional and federal agency repre- tive arrangements. at the member login page on the Academy website. sentatives, as well as leaders of the NAIC and of ➥ Implications of the Multiemployer Pension the U.S. actuarial profession. Reform Act, new reform efforts, and an exam- Session topics will include: SEE ANNUAL MEETING, PAGE 4 WWW . ACTUARY . ORG Actuarial UPDATE AUGUST 2015 2 REGISTER NOW FOR THE AMERICAN ACADEMY OF ACTUARIES 50TH ANNIVERSARY ANNUALANNUAL MEETINGMEETING AND PUBLIC POLICY FORUM NovemberNovember 12-13,12-13, 20152015 Washington Marriott Wardman Park Gain insights into the most • Earn CONTINUING 2660 Woodley Road, NW important PUBLIC POLICY EDUCATION credits. Washington, DC 20008 issues affecting your practice. Hear from distinguished speak- • HONOR your esteemed colleagues as the Academy Stay current in your practice with ers from within and outside the actuarial profession including presents awards honoring cross-practice and practice-specific Academy leaders, as well as Academy members’ sessions on professionalism and public invited administration, illustrious service. congressional, and state policy topics offering continuing • LEARN about the Academy’s insurance officials. education (CE) credits. Four practice- activities and plans for the specific