State insurance department seeks actuarial examination assistance and reinsurance, reserve and pricing risk analysis

Our client’s need

A state insurance department (the “Department”) required actuarial expertise to supplement an ongoing financial examination and assist the examination team in identifying and assessing reinsurance, reserve- and pricing-related risks and related mitigation activities.

Baker Tilly’s solution

The Department retained Baker Tilly to perform the actuarial portions of the statutory financial examination of the insurance organization pursuant to state laws and applicable statutes.

Baker Tilly’s actuarial team participated in planning procedures including gathering and reviewing information, participating in C-level interviews and leading the interview as the appointed actuary. We provided input into the identification of inherent actuarial risks (related to both reserving, reinsurance and pricing) for the insurance organization. We also assessed whether the insurance organization’s controls implemented to mitigate those risks were effective. In addition, Baker Tilly evaluated the residual risk for actuarial risks considering how they were mitigated by the controls in place and reviewed the actuarial liabilities disclosed in the annual statements.

Results achieved

Baker Tilly’s actuarial specialists completed related risk matrices and provided a report to support the assessment of the actuarial risks identified and the effectiveness of the risk mitigation activities. As part of the examination, the report also addressed how the actuarial liabilities as reported in the annual statements of the insurance organization were reasonable, appropriate and adequate as of the statement date.

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