T HINK THE FINANCING PROBLEMS OF MEDICARE are all the result of demographics? Peter Orszag, head of the Congressional Budget Office, might differ with you. In fact, rising health care costs are a much bigger part of the problem, Orszag said in keynote remarks at the Academy’s 2007 Spring Meeting. And taming wild variations in health care spending could be a key part of any solution. “Medicare costs per beneficiary vary widely across the country, but higher spend- ing regions do not have better outcomes than lower spending regions,” Orszag said. “If you push the higher spending closer to the lower spending, you could have savings of 20 percent to 30 percent.” Arguing that excess cost differential, not the demo- graphics of baby boom retirement, is the key long-term fiscal challenge facing the federal government with regard to health care, Orszag called for greater sharing of infor- mation as a way to bring spending variations into line. “With better information and more clarity on what works and what doesn’t work, we could close the gap between regions, producing either reduced costs or increased value for beneficiaries,” Orszag said. Orszag called for the creation of an entity, either within the government or in the private sector, that would serve as a clearinghouse for results, suggest best- practice guidelines, and possibly subsidize clinical tri- als or observational analyses. While an agency within the Department of Health and Human Services already collects information on a small scale, Orszag said there is some sentiment on Capitol Hill that such an agency should be a public-private partnership to ensure buy-in from the medical establishment. Funding for the new entity could come from discretionary appropriations, Actuarial UPDATE Inside M A Y 2 0 0 7 THE NEWSMONTHLY OF THE AMERICAN ACADEMY OF ACTUARIES A T LAST YEAR’S Enrolled Actu- aries Meeting, the talk was all about the need for pension reform. At the 2007 Enrolled Actuaries Meeting, held March 26-28 in Washington, there was a new twist to the conversation: Now that we have pension reform, what do we do with it? The Pension Protection Act of 2006 (PPA), the biggest piece of pension legisla- tion to be enacted since the passage of the Employee Retirement Income Security Act (ERISA) in 1974, was the source of some confusion, not a little griping, and much discussion among meeting attendees. “This is the biggest piece of legislation affecting my world to ever come down the pike,” said Tonya Manning, a member of the Academy’s Joint Program Committee for the Enrolled Actuaries Meeting, who spoke at the meeting’s opening session. “I’ve been in this profession for 34 years, 30 of them as a pension consul- See SPRING MEETING, Page 8 2007 Academy Spring Meeting Shared Data Can Clarify Cost-Saving Options See EA MEETING, Page 4 2007 Enrolled Actuaries Meeting Calculating Progress in the Aftermath of Reform Volunteer Survey The Academy wants to hear from you ....... PAGE 2 The Future of DB Plans Pension professionals meet to consider the options ............ PAGE 5 Spring Meeting 2007 Extensive coverage of concurrent sessions . . PAGES 9-14 Myers Award Frank Dino is the 2007 recipient of the public service award . . . PAGE 15 Peter Orszag addresses Spring Meeting attendees.
Transcript
T HINK THE FINANCING PROBLEMS OF MEDICARE
are all the result of demographics? Peter Orszag, head of the Congressional Budget Office, might differ with you.
In fact, rising health care costs are a much bigger part of the problem, Orszag said in keynote remarks at the Academy’s 2007 Spring Meeting. And taming wild variations in health care spending could be a key part of any solution. “Medicare costs per beneficiary vary widely across the country, but higher spend-ing regions do not have better outcomes than lower spending regions,” Orszag said. “If you push the higher spending closer to the lower spending, you could have savings of 20 percent to 30 percent.”
Arguing that excess cost differential, not the demo-graphics of baby boom retirement, is the key long-term fiscal challenge facing the federal government with regard to health care, Orszag called for greater sharing of infor-mation as a way to bring spending variations into line.
“With better information and more clarity on what works and what doesn’t work, we could close the gap between regions, producing either reduced costs or increased value for beneficiaries,” Orszag said.
Orszag called for the creation of an entity, either within the government or in the private sector, that
would serve as a clearinghouse for results, suggest best-practice guidelines, and possibly subsidize clinical tri-als or observational analyses. While an agency within the Department of Health and Human Services already collects information on a small scale, Orszag said there is some sentiment on Capitol Hill that such an agency should be a public-private partnership to ensure buy-in from the medical establishment. Funding for the new entity could come from discretionary appropriations,
ActuarialU
PDA
TE
Inside
M A Y2 0 0 7 THE NEWSMONTHLY OF THE AMERICAN ACADEMY OF ACTUARIES
A T LAST YEAR’S Enrolled Actu-aries Meeting, the talk was all about the need for pension reform. At the 2007 Enrolled
Actuaries Meeting, held March 26-28 in Washington, there was a new twist to the conversation: Now that we have pension reform, what do we do with it?
The Pension Protection Act of 2006 (PPA), the biggest piece of pension legisla-tion to be enacted since the passage of the Employee Retirement Income Security Act
(ERISA) in 1974, was the source of some confusion, not a little griping, and much discussion among meeting attendees.
“This is the biggest piece of legislation affecting my world to ever come down the pike,” said Tonya Manning, a member of the Academy’s Joint Program Committee for the Enrolled Actuaries Meeting, who spoke at the meeting’s opening session.
“I’ve been in this profession for 34 years, 30 of them as a pension consul-
See SPRING MEETING, Page 8
2007 Academy Spr ing Meet ing
Shared Data Can Clarify Cost-Saving Options
See EA MEETING, Page 4
2007 Enrol led Actuar ies Meet ing
Calculating Progress in the Aftermath of Reform
Volunteer SurveyThe Academy wants to hear from you . . . . . . . PAGE 2
The Future of DB PlansPension professionalsmeet to consider the options . . . . . . . . . . . . PAGE 5
Spring Meeting 2007Extensive coverage of concurrent sessions . . PAGES 9-14
Myers AwardFrank Dino is the 2007 recipient of the public service award . . . PAGE 15
Peter Orszag addresses Spring Meeting attendees.
Calendar
Academy NEWS Briefs
2 Actuarial UPDATE May 2007
MAY3 ASPPA Great Lakes Benefit Conference,
Chicago
4 Academy Life Reserves Work Group meeting, Chicago
5 Academy Pension Practice Council meeting, Philadelphia
6 Academy Pension Committee meeting, Philadelphia
7-8 CAS reinsurance seminar, Philadelphia
8 Academy Strategic Planning Committee meeting, Washington
9 Academy seminar on principles-based reserves, Phoenix
10-11 SOA spring life meeting, Phoenix
14 Academy Life Capital Adequacy Subcommittee meeting, Chicago
14 Academy Health Practice Financial Reporting Committee meeting, Chicago
14-16 Fourth annual International Health Colloquium, Cape Town, South Africa
21-23 IAA PBSS Section Colloquium, Helsinki, Finland
22 Council of U.S. Presidents meeting, Washington
22-23 Academy Board of Directors meeting, Washington
23 Academy Financial Reporting Committee meeting with AICPA, Washington
24-25 ASPPA Employee Benefits Conference, Washington
30-June 1 Employee benefits spring meeting (CCA, SOA), Tampa, Fla.
31 Academy Life Practice Council meeting, San Francisco
JUNE1-4 NAIC summer meeting, San Francisco
3-4 AcademyHealth annual meeting, Boston
5-6 ASPPA Advanced Actuarial Conference, Boston
7-8 ASPPA Northeast Benefits Conference, Boston
10-13 IAA Life Section Colloquium, Stockholm
12-15 16th AFIR Colloquium, Stockholm
13-16 SOA spring health meeting, Seattle
14 Joint Academy Health Practice Council/ SOA Health Section meeting, Seattle
WEB INTERFACELinks to documents underlined in blue are
included in the online version of this issue at www.actuary.org/update/index.asp
Actuarial Classifieds Have an opening in your department that needs to be filled? Feel like expanding your own professional horizons? Your first step, whether you are looking to staff an actuarial position in your company or search for a new job for yourself, should be a trip to the job bank on the Con-tingencies website. There is no cost to post a position opening, and new jobs in both the public and private sectors are added daily. All postings remain active for 30 days.
Life Fellow The Academy’s Life Practice Council is seek-ing an actuary to fill the newly created position of se-nior life fellow. Responsibili-ties would include helping to communicate the Academy’s message on life insurance issues to the public; serve as the Academy’s primary contact with state regulatory and legislative officials, other
public policy and trade orga-nizations, and the news me-dia on matters related to life insurance; and provide actu-arial and policy analysis and guidance on life issues to the practice council, Academy staff, and external audiences. For more details contact Gail Ingram, the Academy’s man-ager of HR and office opera-tions ([email protected]; 202-223-8196).
Timely Trivia At three min-utes and four seconds after 2 a.m. on May 6, the time and date was 02:03:04 05/06/07. This will never happen again.
IN THE NEWSVarious media outlets reported on a special sub-committee hearing of the House Financial Services Committee to discuss extend-ing the Terrorism Risk Insur-ance Act. Hearing coverage that ran online in Bloomberg News and in Insurance Jour-
nal on March 5, as well on WNYC (New York public radio) and in the WashingtonTimes on March 6, men-tioned the Academy’s mod-eled insured-loss estimates
from future terrorist events.
The Academy was the source of life expectancy statistics in a March 8 USA Today article on retirement savings and the risk of outliving them. The article was published in several other major daily newspapers, including the Delaware News Journal and the Indianapolis Star.
An article on the Academy’s principles-based initiative that ran March 13 in the Life & Health online edition of National Underwriter quoted Donna Claire, chairperson of the Academy’s Risk Manage-ment and Financial Sound-ness Committee and presi-dent of Claire Thinking in Fort Salonga, N.Y., and David Neve, co-chairperson of the
Calendar
S PART OF A MAJOR INITIATIVE to increase volunteer participation in Academy activities, the Academy
would like to hear from you. In a recent e-mail message to the member-
ship, Academy President Steven Lehmann has urged members to take the Academy’s web survey on volunteerism. It will be posted on the Academy website until June 1.
The purpose of the survey is to give members who are interested in taking part in the impor-tant work of the Academy the chance to do so. Its genesis lies in the numerous comments about volunteering made by members who took the 2006 membership survey. Clearly, volunteerism is something that Academy members value.
To take the volunteer survey, log in to
www.actuary.org and click on “Volunteer survey” on your member welcome page. You will see a list of Academy volunteer groups, ranging from practice councils to committees to task forces, and will be asked to rank your interest in them. The survey responses will help the Academy better align members’ inter-ests with future volunteer opportunities.
If you didn’t receive Lehmann’s message about the survey, please contact Rachel Rusch, the Academy’s assistant director for member-ship relations and administration ([email protected]; 202-785-7871). If you have questions about the survey itself, contact Kate Callahan, the Academy’s mem-bership services project manager ([email protected]; 202-223-8196).
Academy’s Life Reserves Work Group and second vice president of the Prin-cipal Financial Group in Des Moines, Iowa. Claire said a draft version of the valuation manual might be ready by the June meeting of the National Associa-tion of Insurance Commissioners, and a new draft standard valuation model law might be ready by year’s end. The C-3 capital component of the Academy’s initiative could be ready by the end of 2008. Neve said that actuaries are be-ginning discussions with the Treasury Department about tax implications of principles-based reserving, with the ini-tial focus being on variable annuities.
Academy Senior Pension Fellow Ron Gebhardtsbauer was quoted extensively in a March 19 Pensions & Investmentsarticle on the Federal Reserve Board’s recent report on the flow of the nation’s financial assets. Among other observa-tions, Gebhardtsbauer said that money was being invested into burgeoning defined contribution plans while more mature defined benefit plans posted net outflows as workers continue to retire and draw lifetime income.
Congressional Budget Office Director Peter Orszag’s humorous response to an introduction by Academy Presi-dent Steven Lehmann, a principal and consulting actuary with Pinnacle Ac-tuarial Resources in Bloomington, Ill., before Orszag’s keynote speech at the Academy’s Washington Luncheon (see story, Page 1) was featured in “The Final Word” column of the March 28 Congress Daily. “That’s the kind of introduction that my father would appreciate and my
mother would believe,” Orszag said. A 2006 Academy issue brief on lon-
gevity and retirement policy was men-tioned in a March 30 Washington Busi-ness Journal feature on baby boomers’ decisions to forgo retirement. The issue brief states that though 47 years of work could finance 13 years of retirement in 1940, today many people start working later, retire earlier, and live longer. As a result, 40 years of earnings must now fund 20 years of retirement.
Extended coverage of the 2007 Enrolled Actuaries Meeting by the Bureau of National Affairs featured comments by several Academy members, including Eli Greenblum, chairperson of the Acad-emy’s Multiemployer Plans Subcommit-tee and a senior vice president and actu-ary with the Segal Co. in Washington; David Gustafson, chief policy actuary for the Pension Benefit Guaranty Corp.; Ethan Kra, vice chairperson of the Acad-emy’s Pension Practice Council and chief actuary of retirement for Mercer Human Resources Consulting in New York; and Harlan Weller, an actuary with the U.S. Department of the Treasury.
KUDOSThe Association of Professional Insur-ance Women named H. Elizabeth Mitch-ell, president of Platinum Underwriters Reinsurance Inc. in New York, its 2007 Insurance Woman of the Year. A recep-tion and an award ceremony are sched-uled for June 14 in New York. The award recognizes exceptional women who have achieved prominence in the insur-ance industry. As president of Platinum Underwriters, Mitchell is responsible for
Platinum’s U.S. reinsurance company, which wrote more than $1 billion of premium in 2006. Mitchell is currently vice chairwoman and a member of the Executive Committee of the board of the Brokers & Reinsurance Markets Associa-tion. She also sits on the board of the Reinsurance Association of America.
Donald Segal, the Academy’s vice president for pension issues, has been appointed to the Pension & Benefit Pub-lications Advisory Board at the Bureau of National Affairs (BNA). The advisory board, composed of practitioners in the employee benefits field from all over the country, meets four times a year to dis-cuss topics of interest to both practitio-ners and the BNA editorial staff and cor-respondents. Advisory board members also serve as resources for BNA reporters and editors, advising them of important cases, developments, and trends, and contribute regularly to a BNA-sponsored employee benefits blog.
ON THE MOVEDouglas Robbins has been promoted to assistant vice president, actuarial, for Pacific Life Insurance Co., which is based in Newport Beach, Calif. Robbins joined Pacific Life in 2004 as an actuarial consul-tant responsible for overseeing produc-tion of GAAP reserves and related assets, as well as risk management responsibili-ties for the Annuities & Mutual Funds Division. In his new position, Robbins will oversee and manage the production of GAAP reserves and related asset calcu-lations and will oversee the design, devel-opment, and implementation of the divi-sion’s three-year plan.
The listenership ranking of National Public Radio’s “Morning Edition” among all
radio shows in the United States. The comments of Academy Senior Pension Fellow Ron Gebhardtsbauer were featured in a March 30 “Morning Edition” segment on the effects of an investment firm’s decision to convert its workers’ defined benefit pension plan to a 401(k) plan.
RIG
HT
ON 1
THE NUMBER MEDIA RELATIONS ACTIVITY REPORT—MARCH 2007
Note: Media impressions are a combination of readership, listenership, and viewership. Web impres-sions are distinct from media impressions and reflect the number of daily, unique individuals who access a website. A placement is an article containing an Academy reference and/or a quote or attribu-tion from an Academy spokesperson. A pickup is the publication of an Academy news release, media alert, statement, or letter to the editor.
tant, and PPA is a brand-new experience for me,” agreed Ethan Kra, vice chairperson of the Acad-emy’s Pension Practice Council, who spoke at the same session. But it’s hard to gauge the full impact of the legislation, Kra said, because implementing regulations have yet to be written. “We can’t give our clients answers. We have to be honest and say that the rule books haven’t been written. The umpires don’t even know where the strike zone is going to be,” Kra said.
Of the more than 50 sessions offered at this year’s EA Meeting, at least 16 focused specifically on aspects of PPA as it relates to pension funding rules, funding strategies, underfunding, lump sums, dis-closure, hybrid plans, multiemployer plans, small plans, and plan design opportunities.
But discussion about the effects of the new law wasn’t confined to those sessions. In a ses-sion offering enrolled actuaries the opportunity to engage in dialogue with the Joint Board for the Enrollment of Actuaries about a variety of issues, talk turned to the PPA early on. “We are hoping to go with the basics about the new law in upcoming fall testing (for EA candidates),” said Joint Board Chairman Zenaida Samaniego, an actuary with the Department of Labor.
Another popular session took the discussion one step further: Panelists reflected on what they considered the top 10 unresolved issues in PPA. The list ran somewhat longer than 10 items and included a spirited examination of how to calculate the value of a lump-sum benefit for the purpose of hitting the funding target, the difference between smoothing
and averaging, what is a market rate of return for a cash balance plan, how to determine benefit restric-tions if you haven’t completed the valuation for that year, and how to determine the most valuable ben-efit form in the at-risk funding calculation.
The concluding session of the meeting, which also kicked off the fourth annual pension sympo-sium (see story, opposite), encouraged attendees to focus forward on the larger topic of future changes in the U.S. pension system.
“The future of the DB system depends largely on the creativity of you folks out in the field,” Judith Miller, a staffer on the Senate Finance Committee, told attendees.
Speaking from the floor, Kra suggested that perhaps the actuarial profession needed to increase public education in the area of longevity risk. “With a husband and wife who are both 65, the odds are greater—far greater—that one of them will live to 100 than that their house will burn down in their lifetime. But they don’t know that,” Kra said.
In the wake of the passage of PPA, said James Delaplane, a partner in the benefits group of the law firm of Davis & Harman, “I think we are going to see more focus now on people outside the quali-fied plan system.” Legislative initiatives in this area that might have some traction in coming months include facilitating payroll deductions for IRAs or mandatory savings accounts, Delaplane said. How-ever, Delaplane issued a warning that might have had some resonance for the 1,300 attendees at the meeting’s final session: “There is pension fatigue among policymakers.”
EA MEETING,
From left, Judith Miller, Ron
Gebhardtsbauer, James Delaplane, and Donald Segal confer before the
final session of the EA Meeting.
continued from Page 1
5www.actuary.org Actuarial UPDATE May 2007
Pension Reform: The Next Stage
WHAT IS THE FUTURE of the defined benefit (DB) pension plan? At the March 28-29 fourth annual pen-sion symposium, immediately fol-
lowing the 2007 Enrolled Actuaries Meeting, some 90 pension professionals gathered to consider that and many other questions.
Previous pension symposia centered on examin-ing and brainstorming funding rules in anticipation of reform. In this year’s session, a varied group repre-senting government, regulators, employee advocates, plan benefit organizations, and other policymakers turned its collective attention toward the future of the U.S. retirement system.
Participants opened their discussion looking at the three-legged stool of retirement. Some in the symposium suggested that only Social Security is necessary to provide retirement income. Others pointed to the problems in some European coun-tries, where unfunded social security systems are bankrupting the countries as the result of low fer-tility rates. The general feeling was that employers also need to provide lifetime income, not just savings plans. However, symposium participants acknowl-edged that public education was necessary for work-ers to better appreciate the value of lifetime income available through DB plans.
A representative of AARP’s Public Policy Insti-tute discussed the occupational systems in European countries that cover entire industries (similar to our multiemployer plans), resulting in much higher cov-erage rates than in the United States. Some other speakers suggested a move to institute mandatory plans or mandatory payroll deductions, but advo-cates for small employers expressed concerns about such a move being onerous. Various options for encouraging annuitization from 401(k) plans were discussed, such as requiring that a part of all lump-sum distributions be used to purchase a deferred annuity to handle longevity risk.
In examining the employer’s perspective, partic-ipants agreed that while a good number of employers care about the retirement security of their employ-ees, many are still converting to defined contribu-tion (DC) plans owing to the costs and risks of DB plans and because they are under-appreciated by employees. Several participants pointed out that the
lower capital gains tax rates discourage pensions and annuities, and that pension distributions should also be taxed at those preferred rates. Enabling employers to get value from plan surpluses was mentioned as a high priority, and many participants were hopeful that cash balance plans would make a comeback now that the Pension Protection Act of 2006 has clarified the rules for them. Pre-tax employee contributions were suggested as an incentive to get more employ-ees to care about their DB plan and to reduce costs to employers. Participants also noted that while DB plans are heavily regulated, only recently has Con-gress turned its attention toward DC plans and the fees associated with them.
Symposium participants also heard from employee advocates about new ideas for DB plans. Among the suggestions: New hybrid plans (such as DB-K plans) could be used to combine 401(k) lump sums with longevity protection after age 80 (if the minimum required distribution rules were changed).
Symposium discussion of pension plan financ-ing centered on market risk and longevity risk. Inves-tor interest in buying pension liabilities at a price less than the cost of annuities was raised, but some par-ticipants voiced concern about the risk to employees and to the Pension Benefit Guaranty Corp.
At the end of the symposium, the general con-sensus was that while DB plans are still the best way to provide lifetime income, the challenge facing actu-aries will be how to mold these plans to fit the ever-changing needs of workers and their employers.
—RON GEBHARDTSBAUER AND SAMUEL GENSON
PENSION BRIEFS
The Academy’s Pension Committee recently commented to the Internal Revenue Service about its guidance on changes to the combined pension plan deduction limits as a result of the Pension Protection Act of 2006. The committee argues in its letter that portions of Notice 2007-28 appear to be inconsistent with the language and intent of the new law.
Michael Peskin, managing director with MorganStanley & Co. in New York, has joined the Academy’s Public Plans Subcommittee.
THE ACADEMY’S Financial Reporting Commit-tee and the Actuarial Standards Board (ASB) jointly responded last month to the Financial Accounting Standards Board (FASB)’s invita-
tion to comment on whether there is a need for valu-ation guidance specifically for financial reporting and how such a need might be filled.
The FASB was seeking input from all industries on whether preparers of financial statements believed they would benefit from more guidance in valuing various assets and liabilities specifically for financial reporting (as opposed to such uses as mergers, sales, or litigation) and whether users of these financial statements believed this guidance would add to the usefulness of such valuations.
In an April 13 letter to the FASB, the Academy and the ASB stated that the actuarial profession has a process in place, embodied in the ASB, for providing actuarial standards of practice for numerous financial reporting issues and other topics, such as professional conduct and product pricing. Actuaries are required, as part of the Code of Professional Conduct, to observe these standards while practicing in the United States. The letter also states that the Academy issues a number of practice notes that provide more detailed, non-binding guidance in the form of examples of widely accepted actuarial practice.
The Academy and the ASB recommended that the FASB build upon the foundations of the ASB and simi-
lar organizations within other professions if it decides that preparers of financial statements need more valu-ation guidance. The Academy also indicated its willing-ness to provide further technical input to the FASB as it continued its deliberations.
Henry Siegel is chairperson of the Academy’s Financial Reporting Committee and vice president, office of the chief actuary, for New York Life Insurance Co. in New York.
Andrea Sweeny is vice chairperson of the Academy’s Financial Reporting Committee and a principal with Casualty Actuarial Assistance in Meriden, Conn.
RISK MANAGEMENT AND FINANCIAL REPORTING NEWS
Assessing the Need for Valuation Guidance
RISK MANAGEMENT ANDFINANCIAL REPORTING BRIEFS
Kris DeFrain, chief managing actuary—property/casualty for the National Association of InsuranceCommissioners in Kansas City, Mo.,has joined the Academy’s FinancialReporting Committee.
Jacqueline Friedland, actuarial practice leader for KPMG in Toronto, and Alan Seeley, chief property/casualty actuary for the insurance division of the New MexicoPublic Regulation Commissionin Albuquerque, have joined the Academy’s Risk Margin Task Force.
LIFE BRIEFS
Peter Pham, director of AIG American General Life Cos. in Houston, has joined the Academy’s Annuity Reserves Work Group.
Robert Meilander, vice president and corporate actuary for Northwestern Mutual in Milwaukee, has joined the Academy’s Consistency Work Group.
Joining the Academy’s Illustrations Work Group are Ryan Morris, an associate actuary with New York Life Insurance Co. in Sleepy Hollow, N.Y., and Marian Zeldin, vice president and actuary for Met Life in Somerset, N.J.
Vincent Granieri, president of Integrated Advantage Consultants Inc. in Cincinnati, has joined the Academy’s Governance Subgroup.
Patricia Matson, senior manager and consulting actuary with Deloitte in Hartford, Conn., is the new vice chairperson of the Academy’s Life Financial Reporting Committee.
Bill Wilton, a consulting actuary with Actuarial Resources Corp. in Overland Park, Kan.,has joined the Academy’s Life Financial Soundness/Risk Management Committee.
Karen Rudolph, a principal and consulting actuary with Milliman in Omaha, Neb., has joined the Academy’s Life Capital Work Group.
7www.actuary.org Actuarial UPDATE May 2007
W ITH THE PASSAGE of the Medicare Modernization Act in December 2003, a new “Part D” provid-
ing pharmacy benefits was added to the Medicare program. 2006 was the first year of operation for Medicare Part D and the first opportunity to observe how well the new program is operating.
On March 21, the Academy’s Part D Lessons Learned Work Group sent a letter to the Centers for Medicare and Medicaid Services (CMS), commenting on program features that worked well from an operational perspective and offer-ing recommendations for areas that need additional refinement. The specific les-sons that are detailed in the letter include those related to the use of market-driven benchmarks, the consequences of a single annual enrollment period, the financial effects of risk corridors, the greater use of formularies, the extensive variety in
Part D plans offered, the coverage gap, and the application of bidding rules to special-needs plans.
In addition to general observations, the letter addresses a couple of actuarial issues on which guidance from CMS is specifically needed:
Clarification on how market position-ing and business goals can be factored into the bid under CMS guidance for gain/loss margins. (Current CMS guid-ance indicates that it will “allow varied gain/loss margins for separate bids offered by an organization, under certain circum-stances. The margin variability must be based on bid-specific factors such as risk margins, surplus requirements, taxes, and other key factors used in the devel-opment of the organization’s aggregate gain/loss requirement.”)
Guidance on the parameters CMS uses in its review of certain plan designs, spe-cifically in how it determines the shift in drug utilization or cost, on which there is little experience to use as the basis for an actuarial projection.
Despite the need for improvements in some areas, the work group stated in its letter that “the Part D program has been successful in gaining beneficiary inter-est, beneficiary coverage, and providing choice,” with recent surveys indicating that 75 percent or more of seniors are satisfied with their benefits. The work group also suggested that some of the lessons learned from Part D’s first year of operation may be useful in the current debate about address-ing the problems of the uninsured.
—HEATHER JERBI
Lessons Learned From Medicare Part D
HEALTH NEWS
HEALTH BRIEFS
Joining the Academy’s State-Mandated Coverage Task Force are David Bahn, a retired actuary living in Jacksonville, Fla.; Karen Bender, a principal with Mercer Oliver Wyman in Milwaukee; Andy Gennarelli,accident and health actuary for American Republic Insurance Co. in Des Moines, Iowa; Robert Hastings,an assistant actuary with Blue Cross and Blue Shield Association in Chicago; and Robert Kelly, a retired actuary living in Virginia Beach, Va.
Shari Westerfield, actuary, financial regulatory services, for Blue Cross Blue Shield Association in Chicago, is the chair of the Academy’s newly formed State Health Principles-Based Work Group. Other members of the group are Michael Abroe, a consulting actuary with Milliman in Chicago; Robert Hastings; Thomas Keller, a former president of Assurant Health and a founding member of Magnum Actuarial Group in Biltmore Lake, N.C.; Edward Mullen, vice president and appointed actuary with Physicians Mutual Insurance Co. in Omaha, Neb.; Brian Rankin, vice president and consulting actuary with Lewis & Ellis Inc. in Richardson, Texas; Steve Schoonveld, a consulting actuary with Ernst & Young in Boston; Brad Spenney, second vice president for Aflac Inc. in Columbus, Ga.; John Stark, a retired actuary living in Richmond, Va.; John Timmerberg, a consultant with Timmerberg & Associates Inc. in Indianapolis; D. Joeff Williams, a consultant with Actuarial Management Resources Inc. in Winston-Salem, N.C.; and Robert Yee, an actuary with Senior Health Management Corp. in San Francisco.
through a dedicated funding source such as Medicare, or by private contributions through user fees, Orszag said.
Orszag was the keynote speaker at the Spring Meeting’s Washington Luncheon. The March 28 meeting, which dovetailed with closing sessions of the 2007 Enrolled Actuaries Meeting (see story, Page 1), fea-tured concurrent sessions in the health, casualty, and life areas and a general ses-sion on actuarial standards conducted by members of the Actuarial Standards Board (see stories, Pages 9-14).
The luncheon also featured the pres-entation of the 2007 Robert J. Myers Public Service Award to retired Florida regulator Frank Dino (see story, Page 15). Because Dino was unable to attend the meeting, for-mer Academy President Barbara Lautzen-heiser accepted the award on his behalf.
Following his remarks, Orszag fielded questions from the audience, including one from Richard Foster, chief actuary for the Centers for Medicare and Medicaid Services (and 2006 winner of the Myers Award). Foster asked Orszag whether he thought Congress would take up Medicare funding issues in the absence of an abso-lute crisis. Orszag pointed to employers as likely advocates for greater action.
“I think, if asked, that most American workers have no idea how much employ-ers contribute to their health care,” Orszag said. “If we simply provided information about how much employers pay for health benefits on a tax return, I wonder how much more concern there would be about the need for value in health care.”
He also said states need to take a stron-ger stance on the issue, pointing to the fact that no state Medicaid program has insti-tuted an electronic health record system.
“The potential return from having more information is in all of our interests, and my hope is that Congress will find some balance on that issue over the next couple of years.” Orszag said.
From left, Stephen Goss, Peter Orszag, and Steven Lehmann at the Spring Meeting’s Washington Luncheon
Steven Lehmann greets attendees at one of the concurrent sessions.
Slides with more detail on all the sessions at the
2007 Spring Meeting are online in the members-
only section of the Academy website.
9www.actuary.org Actuarial UPDATE May 2007
ASOPs, the ASB, and You
S p r i n g M e e t i n g G e n e r a l S e s s i o n
THE ACTUARIAL STANDARDS Board (ASB) wants you.
When they roll out a pro-posed actuarial standard of
practice (ASOP), ASB members want your reaction to it. If you think an older standard needs to be tuned up—or maybe even scrapped—they’d like to hear about it. If you want to ask them to create a new standard, the line is open.
That kind of inclusiveness was the recurring theme of the ASB’s session at the Academy’s Spring Meeting general session, where ASB Chairperson Cecil Bykerk, ASB Vice Chairperson Godfrey Perrott, and ASB member Bob Meilander provided a user-friendly, unofficial primer on how the ASB develops ASOPs.
First and foremost, the three ASB members reminded the audience that the standards represent a valuable resource—but only if they’re used. “We’re just trying to get out to people to say, ‘Hey, there’s something called an ASOP. It’s important. You need to think about it. It’s there to help you,’ ” Bykerk said.
Ideally, he said, actuaries should read the standards every year, both to refresh their memories and to keep up with new and revised ASOPs. But many fall short of that goal, he acknowledged—includ-ing, at times, ASB members themselves. A less daunting approach, he suggested, is to aim to read one standard a week. (There are currently 43; so, even with some lapses, the one-a-week method would come very close to the all-stan-dards-once-a-year goal.)
As they read and reread the stan-dards, actuaries may find that more of the standards apply to their work than they’d expected. Perrott said there’s a misconcep-
tion that only two standards apply to all practice areas: ASOP No. 23, Data Qual-ity, and ASOP No. 41, Actuarial Commu-nication. In reality, there are six standards that apply to all areas of actuarial work and two more that apply to casualty, life, and health practice.
Perrott said in addition to the stan-dards on data quality and actuarial communication, four more—ASOP No. 12, Risk Classification; ASOP No.17, Expert Testimony; ASOP No. 21, Assist-ing Auditors or Examiners; and ASOP No. 32, Social Insurance—apply to all practice areas. Two others—ASOP No. 7, Cash Flow Testing and ASOP No. 19, Appraisals—apply to every area except pensions. Emphasizing that he was expressing only his personal view-point, not that of the ASB, Perrott briefly reviewed what he sees as key guidance in those eight standards.
The ASB is also encouraging actuar-ies to get more involved in the standards-setting process. Before any standard is finalized, an exposure draft is issued, comments are invited, and every com-ment is reviewed. Bykerk said that the ASB recently took steps to make it easier to participate in an informed way: Com-
ments on exposure drafts are now posted on the ASB website and can be viewed by anyone visiting the site.
“We really want your input,” Bykerk said. “We really want your comments on our exposure drafts. If you see an ASOP that you think needs to be revised, tell us. And, as I said earlier, anybody can submit a proposal for a new standard. All of you are part of this process.”
The ASB is taking advantage of the electronic era to deliver information
faster in a more environmentally friendly way. When an exposure draft or final standard is approved, it is posted on the ASB website and Academy members are notified by e-mail. Paper copies are available on request but are no longer sent out automatically.
To find out if the Academy has your current e-mail address and is able to send you electronic messages, log in to www.
actuary.org and check the contact infor-mation in your member record. (For more detailed instructions, see “Are You in the Loop?” Page 16.)
To request paper copies of standards and proposed standards, contact Doreen Evans, the ASB’s editorial/administrative assistant (202-223-8196;[email protected]).
Bykerk also discussed the level of guidance the ASB tries to achieve in a standard. The ASB starts by collecting generally accepted practice and then determining whether it should be modi-fied to articulate “appropriate practice.”
And to keep up with the swift-mov-ing effort to establish a principles-based regulatory approach toward life and annuity reserving and capital require-ments, the ASB has set up two task forces that are working with regulators and Academy groups and have developed “discussion drafts” that may eventually become exposure drafts for standards. These drafts have not been reviewed or approved by the ASB, noted Meilander, and are very much works in progress. But they have been widely exposed and, by providing concrete but non-authoritative examples, have proved to be a useful tool in focusing the discussion of what stan-dards might look like.
—ANNE ASPLEN
From left, Bob Meilander, Godfrey Perrott, and Cecil Bykerk field questions at the ASB session.
Spring Meeting Health SessionsPrinciples-Based Approach to Health Reserves
L IKE THE LIFE ACTUARIES before them, health actuaries are tak-ing the plunge into the world
of principles-based reform. Brad Spenney, a member of the Academy’s Principles-Based Work Group, said at the first concurrent session that health actuaries are capitalizing on the work that life actuaries have put in already, in order to avoid reinvent-ing the wheel.
As with life insurance, the cur-rent 150-year-old valuation method-ology hasn’t been able to keep up with the changing marketplace. The prin-ciples-based approach (PBA) enables actuaries to look at the actual risks a company might face and to incorpo-rate a company’s actual experience in valuation calculations.
PBA for long-term care (LTC) insurance faces the added difficulty of not having a lot of actual experi-ence to incorporate, according to John Timmerberg, chairperson of the Work Group’s Issues Subgroup. Cur-rent statutory requirements produce results that sometimes don’t reflect a company’s actual performance, he said. Building a stochastic model that is able to incorporate the significant risks of a complex product will be a challenge.
Among key LTC concerns are how to reflect potential rate increases in future cash flows under varying scenarios, how to develop probabil-ity distributions for morbidity and persistency assumptions, and how to account for ongoing changes in the LTC marketplace and its products.
Shari Westerfield, a member of the Academy’s Health Practice Finan-cial Reporting Committee, reported on PBA developments in other areas of health coverage. Disability insurance, long-term disability, comprehensive major medical, Medicare Advantage/
Medicare supplement policies, and critical illness coverage already use a PBA-like approach.
Under new PBA measures being developed jointly by the National Association of Insurance Commis-sioners’ Life and Health Actuarial Task Force and Capital Adequacy Task Force, company boards of direc-tors would be required to do things they don’t currently have to do. First, they’d have to understand risk and valuation systems, regulatory require-ments, and management reports. They would also have to be able to identify, assess, monitor, report, control, and finance all material risks.
“Makes you wonder whether they’ll be able to find qualified people to serve on boards,” Westerfield said.
Medicare Reform OptionsIn 2006, Medicare’s total expendi-tures represented 3.2 percent of gross domestic product (GDP). They are expected to rise to 11 percent of GDP in 2080. Including interest income, the first year when outgo from the program is expected to exceed income is 2010, and it is expected that Medicare’s trust fund assets will be depleted by 2018.
Citing these statistics, Academy Senior Health Fellow Cori Uccello and Thomas Wildsmith, chairperson of the Academy’s Medicare Steering Committee, quickly established that Medicare is facing a financial situa-tion unequaled by any other social program today.
The session was designed to par-allel a paper on options for Medicare reform that is currently being devel-oped by the Medicare Finance Work Group. Uccello and Wildsmith pro-vided an overview of Medicare’s current financial position and outlined options for reform that would either add to revenue or reduce Medicare spending.
These include increasing the payroll tax, increasing general revenue fund-ing, reducing provider/plan payments, and raising the eligibility age.
Wildsmith said he favors an approach of “working smarter, not harder” through a more efficient delivery system, which he indicated is harder to accomplish than it sounds. According to Wildsmith, options to improve delivery efficiency include competitive bidding, pay for per-formance, and greater use of quality measures.
In a lively question-and-answer session following the presentation, Uccello and Wildsmith fielded que-ries on end-of-life care, the actual cost savings associated with an increase in Medicare’s eligibility age, the impact of tort reform, and the level of inef-ficiency in Medicare/health care deliv-ery. One attendee even suggested his own solution to the problem—a national health care system that is actuarially advance-funded.
“There is no one magic bullet,” said Uccello. “Any reform option has advantages and disadvantages.” While finding a solution to Medicare’s sol-vency problems is crucial, Uccello was quick to point out that Medicare’s problems are only symptomatic of a larger issue. “We can’t look at Medicare in isolation,” she said. “We need to look at the broader problem of rising health care costs.”
Predicting Federal HealthcarePrioritiesWhat health issues will the 110th Congress be taking up? David Shea, chairperson of the Academy’s Federal Health Committee, named a long list of contenders, including reauthori-zation of the State Children’s Health Insurance Program, genetic nondis-crimination, mental health parity, long-term care, individual market
11www.actuary.org Actuarial UPDATE May 2007
issues, Medicaid, topics related to Medicare Part D, the Bush admin-istration’s tax reform proposals, the uninsured, and health care informa-tion technology.
But, warned Shea, a panelist at the third concurrent health ses-sion, all this activity won’t neces-sarily translate into action. “During the Health Practice Council’s annual Hill visits, we learned that staff are engaged on health care issues, but there was uniform acknowledgment that no one knew where the money to pay for everything would come from,” said Shea.
Moving to specifics, Karl Madrecki, chairperson of the Academy’s Unin-sured Work Group, outlined some of the current issues affecting health care coverage, such as affordability, quality and efficiency in health care delivery, and cost-shifting.
“Cost-shifting is an inherent part of pooling like risks between those without claims and those with claims. On the other hand, health insurance is unique in that its cost is affected by those outside the insured pool, where the cost of treating the uninsured is split and shifted onto the insured pool,” Madrecki said. “With cost-shifting, you are often just moving dollars around, not addressing the underlying issues.”
Different approaches have been suggested to address the problems of the uninsured, Madrecki said. These include Medicaid expansions, changes in tax treatment, employer mandates, health savings account (HSA) expan-sion, and tax credits. Other proposals include the reduction or elimination of the business tax deduction, a cap on individual deductions for health insurance, and allowance of full deductibility for health care expenses. Real opportunities exist for reducing overall cost by improving the quality and efficiency of health care delivery
and treatment, Madrecki said.Another important option to
consider, said Patrick Collins, vice chairperson of the Academy’s Federal Health Committee, is government rein-surance. While reinsurance may help reduce risk, provide intellectual capital and value-added services, and reduce required capital, Collins warned that it would probably not reduce overall medical costs or make it possible to insure uninsurable risks.
All three panelists agreed that while problems of the uninsured are not likely to be resolved in the current Congress, discussions that occur in the next two years—including those raised as part of the 2008 presidential cam-paign—will be crucial to the develop-ment of viable proposals.
Premium Deficiency Reserves Help Keep the Red OutActuaries and accountants don’t always view the world in the same way, and their divergent views of pre-mium deficiency reserves (PDR) have caused some confusion for actuaries. A forthcoming public policy discussion paper, written by the Premium Defi-ciency Reserves Work Group of the Academy’s Health Practice Financial Reporting Committee, seeks to clarify things. The paper got its first public exposure in the final health concur-rent session at the Spring Meeting.
“Actuaries tend to focus just on how to calculate present value, while accountants have to worry about how it will affect the balance sheet. This results in some inconsistency in how they interpret the available guidance.
We hope our discussion paper provides some insight,” said Donna Novak, chairperson of the work group.
The paper outlines the general principles of which situations should result in PDR, along with examples and guidance on how to minimize the risk of false positives (business that may be temporarily unprofitable but does not need PDR) and false negatives (business whose chronic unprofitability may be disguised by temporary conditions).
D. Joeff Williams, a member of the work group, explained how the paper can help actuaries address some of the main challenges of PDR, such as what kind of business should be included in calculations.
Typically, said Williams, new business isn’t included in gross pre-mium valuations, but if a state has mandated a new policy that the actu-ary knows will lose money, it could legitimately be included in the PDR calculation.
The matter of contract grouping in determining the need for PDR has been highly controversial, according to Williams. Actuaries are allowed to balance deficient blocks of busi-ness against healthy blocks, and have some discretion about which business makes up each group. The watchword, says Williams, is that any grouping of insurance contracts should be consistent.
The paper also discusses pro-jection periods, expenses, and testing and reporting levels and includes frequently asked questions on the topic.
Novak emphasized that the paper is meant to be descriptive and helpful to actuaries working in insur-ance companies but is not binding or comprehensive, since practices and approaches may change.
PARTICIPANTS ATTENDING the first two casualty con-current sessions got a valuable refresher course on risk transfer testing in the context of finite reinsur-
ance. In an overview of recent developments, Marc Ober-holtzer, chairperson of the Academy’s Committee on Prop-erty Liability Financial Reporting (COPLFR), reviewed the National Association of Insurance Commissioners’ (NAIC) initial changes to actuarial reporting that became effective at the end of 2005. The changes included additional dis-closures pertaining to ceded reinsurance contracts as well as a CEO/CFO attestation requirement.
Discussing attestation in some detail, Oberholtzer described situations in which risk transfer testing is not required. He also talked about an invitation to comment that the Financial Accounting Standards Board (FASB) issued in 2006. The FASB proposal would have, among other things, bifurcated insurance and reinsurance con-tracts into those requiring insurance accounting and those requiring deposit accounting. (This aspect of the FASB proposal has since been dropped.)
Oberholtzer also summarized Academy efforts on reinsurance risk transfer. Shortly after the NAIC instituted the reporting changes, COPLFR issued a report on risk transfer. The report included results from an Academy-developed company survey, conducted by the NAIC, to
determine the manner in which companies were handling risk transfer. Soon after issuing the report, COPLFR pub-lished a risk transfer testing practice note to provide guid-ance to practitioners in this developing field. COPLFR also commented on FASB’s 2006 bifurcation proposal. Most recently, COPLFR issued an update to its risk trans-fer testing practice note elaborating on the “reasonably self-evident” standard and including checklists used in the industry to accurately classify reinsurance contracts.
The second concurrent session featured a panel dis-cussion on risk transfer testing, its role in litigation, and guidelines for proper actuarial practice in this context. Led by Oberholtzer, the other members of the panel were Chap Cook, a member of the Academy’s Casualty Practice Council, Ken Kruger, and Joe Sieverling. The discussion centered on the liability of reinsurers and ceding companies, and it later turned to the possible future development of an actuarial standard of practice to govern risk transfer testing.
Legislative Activity in the P/C ArenaThe most likely legislative action this year in the casualty arena will be in reaction to past events, most notably the terrorist attacks of 2001 and the destructive 2005 hurricane season.
“September 11 was one of those sea-change events that changed practices in the insurance industry,” said Michael McCarter, chairperson of the Academy’s Terror-ism Risk Insurance Subgroup.
With the extension of the Terrorism Risk Insurance Act set to expire at the end of 2007, Congress will be con-sidering whether to enact a permanent extension of the program. While such legislation appears more likely to pass than not, McCarter told attendees at the third casu-alty concurrent session, details of what the final legislation will look like—whether it would contain provisions for group life coverage, for instance—are hard to forecast.
As for pending state and federal legislation in the area of natural disasters, said Stuart Mathewson, chair-person of the Academy’s Flood Insurance Subcommit-tee, “Everything I will talk about today is fallout from Katrina and Rita.”
A variety of bills, sponsored by a cross section of Flor-ida and Gulf Coast legislators, have been introduced in Congress. They would, variously, establish a federal natural catastrophe fund, provide federal catastrophe reinsurance for private insurance as well as for qualified state-run pro-
Spring Meeting Casualty Sessions
Ralph Blanchard, left, and Christopher Carlson discuss a proposed casualty standard on unpaid claim estimates.
13www.actuary.org Actuarial UPDATE May 2007
grams, create a bipartisan commission to assess the condi-tion of the P/C insurance and reinsurance markets after the 2005 hurricane season as well as the ongoing exposure in the United States to natural disasters, and institute new individual catastrophe savings accounts.
Mathewson also discussed recent legislative action in Florida that significantly boosted the capacity of the Florida Hurricane Catastrophe Fund and, at the same time, lowered property rates for Florida’s Citizens Prop-erty Insurance Corp., which insures homeowners in high-risk areas and others who cannot obtain coverage in the private market.
“This was a really good thing for people in Florida, as long as there is never another hurricane,” Mathewson quipped.
Unpaid Claim EstimatesIn the final concurrent session in the casualty track, Ralph Blanchard, a member of the Actuarial Standards Board’s (ASB) Subcommittee on Reserving, and Chris Carlson, former chairperson of the ASB’s Casualty Com-mittee, discussed the second exposure draft of a pro-posed actuarial standard of practice on property and casualty unpaid claim estimates.
More than four years in development, the proposed standard would apply to most unpaid claim estima-tions, not just opinion work, said Carlson. The proposed standard’s scope would include the evaluation of unpaid obligations of self-insureds (not just insurance entities) and written and electronically transmitted estimates. It excludes rate-making applications, oral communications, and any actions taken after production of the unpaid claim estimate.
A first exposure draft of the proposed standard received 32 comments, with the most attention paid to a section defining the intended measure. “We want it to be clear what the actuary is estimating,” Blanchard explained. Simply indicating “best estimate” or “actu-arial estimate” isn’t enough. The actuary must indicate the best estimate of what—for example, whether it is based on more optimistic assumptions or less optimistic assumptions than would normally be expected. Once the intended measure is decided, the purpose and use shouldn’t bias the estimate relative to that intended measure.
The comment deadline for the second exposure draft, which was released in March, was May 1.
—LINDA MALLON AND LAUREN PACHMAN
From left, Bill Bluhm, Steven Lehmann, and Kevin Cronin at the Spring Meeting
From left, William Hines and Tom Campbell review the principles-based approach for reserving and capital requirements.
Maintaining Principles-Based Momentum
ACCORDING TO PREDICTIONS made at the Spring Meeting session on principles-based life products, the transition from a formulaic
method used for life insurance reserving and capital requirements to a principles-based approach (PBA) is likely to gain momentum this year as the National Association of Insurance Commissioners (NAIC) moves forward on work in a number of areas.
Driven by an ineffective regulatory structure that is governing ever more innovative life insurance products, as well as by requirements that sometimes result in redundant reserving, the Academy and the NAIC have been working together for several years to develop a more efficient system.
Both insurers and regulators will have a greater ability to assess the full financial strength of com-panies (and whether they are adequately reserved) through the application of principles that are sup-ported by a more appropriate governance and over-sight process.
Session speakers Thomas Campbell, vice chair-person of the Academy’s Life Practice Council, and William Hines, a member of the council, indicated
that the NAIC would be issuing its valuation manual to accompany a new standard valuation law on how to apply PBA this year.
The two discussed key goals of a U.S. frame-work for PBA, including:
A total balance sheet approachAn appropriate level of conservatism in establish-
ing and maintaining solvencyA consistent and integrated risk measurement and
governance processAn auditable, verifiable, and justifiable risk man-
agement processThe flexibility to address all lines of business and
to accommodate evolving risks and productsA uniformity of national standards and of compli-
ance review across all statesAn effective utilization of resources.
Key issues that are still under discussion include determining the treatment of aggregate versus indi-vidual margins and the treatment of reinsurance; reviewing how reserves would be treated under the tax code; and deciding how to handle consistency with proposed international accounting standards.
—JOHN SCHNEIDAWIND
15www.actuary.org Actuarial UPDATE May 2007
Dino Receives Myers Award
IN RECOGNITION of his many accomplish-ments as a regulator in Colorado and Florida and as an active member of the National Association of Insurance Commissioners
(NAIC), Frank Dino was awarded the Academy’s prestigious Robert J. Myers Public Service Award at the 2007 Spring Meeting’s Washington Luncheon.
Dino, a resident of Panama City Beach, Fla.,was the chief actuary for the insurance divisions of Florida and Colorado, and served as a member of the NAIC’s Life and Health Actuarial Task Force from 1991 to 2006—leading the committee as chairperson in 1995. He retired from his position of chief actuary for the Florida Office of Insurance Regulation in July 2006.
“Frank Dino’s efforts at the NAIC continually elevated the professional standing and respect accorded to the Life and Health Actuarial Task Force, the state of Florida, and the American Academy of Actuaries,” said Academy President Steven Lehmann in announcing the award.
“Frank literally looked at the public’s best interest in every issue he dealt with—how it affected the public, how it benefited the public,” said former Academy President Barbara Lautzenheiser, who accepted the award on Dino’s behalf because other commitments kept him from attending the luncheon.
In fact, Dino said in a recent interview with the Update, the thing that attracted him to regulatory work when he first qualified as an actuary was the element of public service. “I found regulatory work to be almost like teaching,” said Dino, who taught secondary school math while getting his master’s degree. “I was providing a service and helping people, particularly in the area of consumer protection.”
Looking back on his career as a regulator, Dino pointed to several accomplishments that he is particularly proud of, including improved asset
adequacy testing requirements, a revised model nonforfeiture law for annuities, the development of Actuarial Guideline 33 on reserves for annuity contracts, and a number of regulations related to long-term care.
Dino said that regulatory work required him to balance what was good for consumers and what was good for insurance companies. “You can’t shortchange either one. Our role is to keep an eye on both sides and establish fair controls and safeguards,” Dino said.
Dino said that he still provides occasional assistance to the Florida Office of Insurance Regulation. But, he added, “I’m trying to get my Intro to Retirement 101 completed.” As soon as that is accomplished, Dino said, he is sure that he and his wife will be looking for service opportunities. “We will try to be involved in some way with the community,” Dino said.
Robert MiccolisAllan RyanDavid SandbergJohn SchubertDonald SegalTimothy Tongson
EXECUTIVE DIRECTOR
Kevin Cronin
DIRECTOR OF
COMMUNICATIONS
John Schneidawind
ASSISTANT DIRECTORFOR PUBLICATIONS
Steven Sullivan
MANAGING EDITOR, INTERNET AND NEW MEDIA
Anne Asplen
EXECUTIVE OFFICE
The American Academy of Actuaries1100 Seventeenth Street NWSeventh FloorWashington, DC 20036Phone 202-223-8196Fax 202-872-1948www.actuary.org
Statements of fact and opinion in this publication, including editorials and letters to the editor, are made on the responsibility of the authors alone and do not necessarily imply or represent the position of the American Academy of Actuaries, the editors, or the members of the Academy.
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