Date: 7/22/20 2020 Summer National Meeting Virtual Meeting CASUALTY ACTUARIAL AND STATISTICAL (C) TASK FORCE Wednesday, August 5, 2020 12:30 – 2:00 p.m. ET / 11:30 a.m. – 1:00 p.m. CT / 10:30 a.m. – 12:00 p.m. MT / 9:30 – 11:00 a.m. PT ROLL CALL Steve Kelley, Chair Minnesota Chlora Lindley-Myers Missouri James J. Donelon, Vice Chair Louisiana Barbara D. Richardson Nevada Jim L. Ridling Alabama Chris Nicolopoulos New Hampshire Lori K. Wing-Heier Alaska Marlene Caride New Jersey Evan G. Daniels Arizona Russell Toal New Mexico Ricardo Lara California Mike Causey North Carolina Michael Conway Colorado Jillian Froment Ohio Andrew N. Mais Connecticut Glen Mulready Oklahoma Karima M. Woods District of Columbia Andrew R. Stolfi Oregon David Altmaier Florida Jessica K. Altman Pennsylvania Colin M. Hayashida Hawaii Raymond G. Farmer South Carolina Robert H. Muriel Illinois Kent Sullivan Texas Doug Ommen Iowa Michael S. Pieciak Vermont Vicki Schmidt Kansas Mike Kreidler Washington Eric A. Cioppa Maine James A. Dodrill West Virginia NAIC Support Staff: Kris DeFrain/Jennifer Gardner AGENDA 1. Consider Adoption of its July 14, 2020; May 19, 2020; Feb. 18, 2020; Jan. 28, 2020; Attachment One and 2019 Fall National Meeting Minutes—Phil Vigliaturo (MN) 2. Consider Adoption of its Working Group Reports— Phil Vigliaturo (MN) Attachment Two a. Actuarial Opinion (C) Working Group—Anna Krylova (NM) b. Statistical Data (C) Working Group—Carl Sornson (NJ) 3. Discuss the Continued Competence Charge and the 2021 Casualty Actuarial Society (CAS)/ Attachment Three Society of Actuaries (SOA) Task Force’s Appointed Actuary Continuing Education Log —Phil Vigliaturo (MN) 4. Discuss Proposal 2019-49 (Retroactive Reinsurance Exception) of the Statutory Accounting Principles (E) Working Group—Gordon Hay (NE) 5. Discuss the Best Practices for Regulatory Review of Predictive Analytics White Paper and Attachment Four Comments Received—Rich Piazza (LA) 6. Hear Reports from Actuarial Organizations a. American Academy of Actuaries (Academy) Casualty Practice Council and the Committee on Property and Liability Financial Reporting (COPLFR)—Lisa Slotznick and Kathleen C. Odomirok (Academy) b. Academy Council on Professionalism—Shawna Ackerman (Academy), Godfrey Perrott (Actuarial Board for Counseling and Discipline—ABCD), and Kathleen A. Riley (Actuarial Standards Board—ASB) © 2020 National Association of Insurance Commissioners 1 c. SOA General Insurance Actuarial Research and Education Update—R. Dale Hall (SOA) Attachment Five d. CAS Property/Casualty (P/C) Actuarial Research—Ralph Blanchard (CAS) 7. Discuss Any Other Matters Brought Before the Task Force—Phil Vigliaturo (MN) 8. Adjournment W:\National Meetings\2020\Summer\Agenda\CASTF.docx © 2020 National Association of Insurance Commissioners 2 Attachment XX Casualty Actuarial and Statistical (C) Task Force 8/5/20 Draft: 7/22/20 Casualty Actuarial and Statistical (C) Task Force Conference Call July 14, 2020 The Casualty Actuarial and Statistical (C) Task Force met via conference call July 14, 2020. The following Task Force members participated: Steve Kelley, Chair, represented by Phil Vigliaturo and Connor Meyer (MN); James J. Donelon, Vice Chair, represented by Warren Byrd, Rich Piazza and Larry Steinert (LA); Lori K. Wing-Heier represented by Michael Ricker (AK); Jim L. Ridling represented by Daniel Davis (AL); Christina Corieri represented by Vanessa Darrah, Vincent Gosz and Tom Zuppan (AZ); Ricardo Lara represented by Mitra Sanandajifar (CA); Michael Conway represented by Mitchell Bronson, Eric Unger and Sydney Sloan (CO); Andrew N. Mais represented by Susan Andrews, Wanchin Chou and Qing He (CT); Karima M. Woods represented by David Christhilf (DC); David Altmaier represented by Robert X. Lee (FL); Doug Ommen represented by Travis Grassel (IA); Robert H. Muriel represented by Reid McClintock and Judy Mottar (IL); Vicki Schmidt represented by Nicole Boyd and Heather Droge (KS); Eric A. Cioppa represented by Sandra Darby (ME); Chlora Lindley- Myers represented by Cynthia Amann, LeAnn Cox, Kendra Fox and Julie Lederer (MO); Mike Causey represented by Arthur Schwartz (NC); Chris Nicolopoulos represented by Christian Citarella (NH); Marlene Caride represented by Mark McGill (NJ); Russell Toal represented by Anna Krylova (NM); Barbara D. Richardson represented by Gennady Stolyarov (NV); Jillian Froment represented by Maureen Motter (OH); Glen Mulready represented by Landon Hubbart, Andrew Schallhorn and Shelly Scott (OK); Jessica K. Altman represented by Kevin Clark, James DiSanto, Michael McKenney and Bojan Zorkic (PA); Raymond G. Farmer represented by Will Davis and Michael Wise (SC); Kent Sullivan represented by J’ne Byckovski, Brock Childs, Nicole Elliott, Miriam Fisk, Melissa Heggen, Eric Hintikka, Walt Richards and Bethany Sims (TX); Michael S. Pieciak represented by Rosemary Raszka (VT); and Mike Kreidler represented by Eric Slavich (WA). Also participating were: Kevin Dyke (MI); Gordon Hay (NE); and Tomasz Serbinowski (UT). 1. Adopted the Report of the Actuarial Opinion (C) Working Group Ms. Krylova said the Actuarial Opinion (C) Working Group met June 11 to review the latest version of the risk repository in the Financial Condition Examiners Handbook. The Working Group will continue discussion after the Financial Examiners Handbook (E) Technical Group exposes its next revisions later in 2020. The Working Group exposed changes to the Financial Analysis Handbook and the Financial Condition Examiners Handbook on July 13 for a 45-day public comment period ending Aug. 27. Ms. Krylova made a motion, seconded by Mr. Piazza, to adopt the report of the Actuarial Opinion (C) Working Group. The motion passed unanimously. 2. Discussed a COVID-19 Proposed Data Call Mr. Vigliaturo said Mr. Schwartz proposed an NAIC data call on COVID-19 for multiple lines of insurance, including commercial lines and workers’ compensation, on the Task Force’s May 19 call. Mr. Vigliaturo said the public and legislators would be interested in this data, and the data could be used in a lot of ways in the future. He said he would create templates for a data call. Mr. Schwartz explained his attached proposal (Attachment __). He said the data would allow actuaries to look at changes to frequency, severity and premium distribution by month by state and compare those to the same period a year ago. He said the Insurance Services Office (ISO) has a presentation on data aspects of COVID-19, but it did not provide actual data. Mr. Schwartz proposed that the data call be completed immediately and quarterly thereafter. Data would need to be reviewed for reasonability, and companies may need to be contacted and questioned about their data; only aggregate data would be available publicly. Mr. Schwartz said the data would be useful to project premium taxes. He said the data would be useful to consumers, media, state insurance regulators, and legislators, and it could help the industry. The following issues were discussed: 1) frequency can be calculated in different ways using the proposed data; 2) this data call potentially overlaps with work being done by the Property and Casualty Insurance (C) Committee and the Market Regulation and Consumer Affairs (D) Committee; 3) the proposed monthly breakdown is needed because each month is affected differently; 4) the 2019 distribution might not be a typical distribution for comparison to 2020; 5) 2020 data is also affected by non-COVID-19 factors; 6) accident year data would be better than calendar year data for this type of analysis; 7) the data call should be limited to lines of business severely affected; 8) a financial solvency data call might be more important; 9) the data call would be burdensome to the industry; 10) advisory organizations might be able to collect and share data; 11) data definitions are needed; and 12) projected values will be difficult to estimate. © 2020 National Association of Insurance Commissioners 1 Attachment XX Casualty Actuarial and Statistical (C) Task Force 8/5/20 Mr. McKenney said some accident year claim, loss, and exposure data for the lines of business affected would be useful. He said some companies are filing rate changes based on 2019 data with no analysis of the pandemic. Mr. Davis said a company filed for an auto insurance rate increase in Alabama. He questioned how the company would know that claim frequency will return to pre-COVID-19 levels. Mr. Steinert said a company provided a COVID-19 analysis in which there are drivers increasing costs, such as people driving faster, a low supply of auto parts, and recessionary influences. Birny Birnbaum (Center for Economic Justice—CEJ) recommended that the Task Force review a data call proposed by the Consumer Federation of America (CFA), and the CEJ proposed a data call. He said: 1) new claims received would be a useful data element; 2) data should be granular and on a weekly basis; 3) new claims received could be compared to new claims received in months or a year prior; 4) COVID-19 is the dominant factor on changes to frequency and severity; 5) traditional data elements have problems from timing (e.g., paid claims include claims initiated in prior periods, and premium would be affected by refunds or rebates; 6) the key items are exposures in force; 7) the data call format should be one table rather than multiple Excel worksheets; and 8) the data should all be made public. Angela Gleason (American Property Casualty Insurance Association—APCIA) said the Property and Casualty Insurance (C) Committee and the Market Regulation and Consumer Affairs (D) Committee data call has focused on business interruption, but there is consideration to expand to more lines. She said the proposal is for a lot of data, and companies are right in the middle managing the crisis. She said the data call could divert important resources from helping consumers. Peter Kochenburger (University of Connecticut School of Law) said companies are likely collecting the data for their own purposes, so there would be work to put the data in the regulatory requested format, but he said it would seem like there would not be much additional work.