California comments on 2017-81

  1. By and large there appears to have been an effort – to date – to minimize the use of footnotes in theValuation Manual. There were only three, and this will add two more, which is probably fine. However, the three existing footnotes – which exist in more than one chapter of the VM -- are numbered 1, 2, and 3, so the two new ones in VM-50 will need to be numbered 4 and 5, not 1 and 2.
  2. The previous notation “20XX” seemed better than just “X” for the identifying of a given calendar year.
  3. VM-51 indicates that calendar year 20XX experience gets reported by Sept. 30 of 20XX+1. Here, this VM-50 proposal is indicating that calendar year 20XX experience gets reported in calendar year 20XX+2. Which is correct?
  4. On 3A6, line 1, “will enter” seemingly should (as suggested by Bill Carmello) be “will seek to enter”, especially since the “seek” language is used a few lines later.
  5. In 3A8, line 4, it would be good to add “of this topic” to “should have regular …discussion”
  6. In 4A1, could there be some better phrase than “control for errors”? Maybe “spot errors”?
  7. Where in VM-50 or VM-51 does it tell a company what to do about reporting age/sex misstatements discovered at time of death? Usually a company handles these manually outside the system. The point here is that the issue age and the exposures that had been reported all along were wrong, and the death claim payout is something other than the face amount. Instructions of some sort seem necessary, especially in light of the stern warning shown in 4B.
  8. Re this sentence in 4D13:

Results which appear to indicate a significantly higher than average chance that a body of data may contain

errors shall be reported to companies with an explanation of the unusual finding and its possiblesignificance.
What does “a significantly higher than average chance” mean? Higher than a 50% chance?The average of what? Also,shouldn’t “shall be reported to companies” be “shall be reported to the company”?

  1. In 4F3a, are there really international agencies who would have a right to access this data?
  2. Is the report in 4H sent to one state, or to all states?
  3. What is 5A4 talking about:
    4. This section summarizes, generally, the data that the NAIC must maintain and produce. Subsequent sections provide the specific detailed requirements for reporting on the various lines of insurance.

Is “This section” referring to VM-50 As a whole? Does “Subsequent sections” simply mean VM-51? If so can we change the wording to say so?

  1. 5F3 seems like it can be deleted since it is already covered under 5C3 and since it appears to have nothing in particular to do with Professional Actuarial Organizations.

Ben Bock, FSA, MAAA

Senior Life Actuary

California Dept. of Insurance