Every appointed actuary who signs a property and casualty statutory reserve opinion attests that the carried amounts are computed in accordance with accepted actuarial standards and principles. The NAIC's redlined 2026 worksheet deletes the last two words. A drafter's margin note supplies the reason in one line: the Casualty Actuarial Society rescinded its reserving principles in December 2020 (NAIC, August 27, 2026).

Formally it is III.B.8.a.i of the NAIC Financial Analysis Handbook, the checklist a state analyst works through on a filed opinion. The Actuarial Opinion (C) Working Group exposed it for a 22-day comment period closing September 18, 2026, publishing all 12 pages with 38 drafter comments across 14 review questions. Here the sentence defining what a booking was attested to is being rewritten in tracked changes.

Key Takeaways

  • December 2020 is when the CAS board rescinded its Statement of Principles Regarding Property and Casualty Unpaid Claims Estimates, adopted November 2014. Six statement cycles of signed opinions have since cited a withdrawn document.
  • May 7, 2021 is when the CAS reinstated the ratemaking principles under regulator pressure. The reserving principles drew no comparable campaign and stayed rescinded, which is why the form is only now catching up.
  • Lines 7 and 8 of Exhibit A must carry direct-and-assumed and net unearned premium reserves for P&C long duration contracts regardless of materiality, and the type-of-opinion branch has been relocated below them.
  • October 1, 2024 is when the revised ASOP No. 36 took effect, extending opinion scope to long duration unearned premium and extended reporting endorsement reserves. The statutory worksheet is conforming two years later.
  • "and principles" survives inside the redline. The replacement branch the drafters insert tests Exhibit A against "accepted actuarial standards and principles," the exact phrase struck one page earlier.

What the Redline Strikes

Review question 6 asks whether the opinion states that reserves meet the domiciliary insurance laws and are computed in accordance with accepted standards. The redline changes "accepted loss reserving standards and principles" to "accepted actuarial standards." Comment JL17 covers the first half: the instructions say actuarial standards. Comment JL18 covers the second: "We removed this from the instructions because the CAS reserving principles have been rescinded" (NAIC drafting comment, August 27, 2026).

The same phrase is struck again a few lines down, at the sub-item testing whether Exhibit A amounts were computed in accordance with accepted actuarial standards, with the identical rationale at comment JL21. Two other edits ride along: "policies" becomes "contracts," and the clause asking whether all portions of the insurer's reserves are covered is deleted outright, because an appointed actuary need not opine on unearned premium for short duration contracts.

Both edits conform the worksheet to the 2026 P&C Opinion Instructions exposure draft, whose paragraph 5 illustration of the OPINION paragraph now reads simply that the amounts "are computed in accordance with accepted actuarial standards."

Behind both sits an episode the profession settled and then stopped watching. The CAS board withdrew three Statements of Principles in December 2020, reasoning that more than fifty US Actuarial Standards of Practice had created considerable overlap. The NAIC's Casualty Actuarial and Statistical Task Force voted unanimously to urge reversal, writing that the rescindment "provides the impression that the principles are no longer viewed as valid by the actuarial profession" (Carrier Management, March 12, 2021).

That letter was about ratemaking. The ratemaking statement came back on May 7, 2021, with CAS staff actuary Ken Williams citing "conversations with U.S. regulators." The unpaid claims statement, three principles across two pages, still carries its rescission stamp.

Worksheet itemStruckAddedDrafters' stated reason
Q6 opinion test"loss reserving standards and principles""actuarial standards"CAS reserving principles rescinded (JL18)
Q6.a.ii Exhibit A test"and principles"noneSame rationale (JL21)
Q5 data reliance"an officer of the company""individual at the company"Officer requirement dropped (JL13)
Q4.b.iv Exhibit A scopenoneLong duration UEPR "regardless of whether the amounts are material"Added to 2026 instructions (JL9, JL10)
Q6 type-of-opinion branchAbove the reserve itemsBelow long duration and other reserve itemsThose amounts can change the opinion type (JL22)
Q6.g reliance metric"what percentage of the total reserves was based on the work of others?"noneMoved to the actuarial report (JL28)

Long Duration Premium Reserves Move Onto Exhibit A

A P&C long duration contract, per the 2026 instructions, runs 13 months or longer and cannot be cancelled or repriced mid-term, excluding financial guaranty, mortgage guaranty and surety. Those are the three tests of SSAP No. 65 in the NAIC Accounting Practices and Procedures Manual, and in practice they capture vehicle service contracts, home warranty, and multi-year specialty programs.

Exhibit A must now carry the direct-and-assumed and net unearned premium reserves for those contracts "regardless of whether the amounts are material." Question 4 of the worksheet mirrors that and adds a follow-through: where the amounts on lines 7 or 8 are nonzero but the actuary deems them immaterial and issues no opinion on them, clarifying comments belong in the SCOPE, OPINION or RELEVANT COMMENTS sections.

Then comes the structural edit. The deficient, redundant, qualified and no-opinion branch used to sit directly under the loss and LAE reasonableness test. Comment JL22 records the move below the long duration and other reserve items "because if reserves for these items are not deemed reasonable and the amounts are material, the entire opinion may be of a type other than reasonable." A warranty book's premium reserve now sits upstream of the label on a loss reserve opinion.

The authority for that expansion was never the rescinded document. Its three principles govern unpaid claims estimates, and unearned premium is a different liability. What put these items in scope was ASOP No. 36, adopted March 2024 and effective October 1, 2024, retitled to cover "Loss, Loss Adjustment Expense, or Other Reserves" and defining those to include unearned premium reserves for long-duration contracts and for extended reporting endorsements. The struck clause was doing no work for the reserve items being added.

Extended reporting endorsements are where the reserving consequence lands. SSAP No. 65 classifies the death, disability and retirement tail reserve on a claims-made policy as part of unearned premium, yet the instructions concede that "some companies instead report the reserves as part of the loss and loss adjustment expense reserves." Exhibit B disclosure item 11 covers every P&C line carrying that coverage, while the Schedule P Interrogatory asks only about medical professional liability. A lawyers professional liability book with tail reserves sitting in loss reserves now yields an Exhibit B figure with no Schedule P tie-out.

A Drafting Inconsistency in the Replacement Text

Relocating the branch meant rewriting it where it landed, and the new text reads: "If amounts on Exhibit A do not meet the requirements of the insurance laws of the state of domicile, are not computed in accordance with accepted actuarial standards and principles, or do not make a reasonable provision, the type of opinion is: Deficient or Inadequate..."

That is the phrase the redline struck twice, one page earlier, on the stated ground that the document it references has been withdrawn since December 2020. Adopted as exposed, the worksheet would have an analyst test a reasonable opinion against standards alone and test the deficient, redundant, qualified and no-opinion path against standards and principles. The escalation branch would carry the dead reference.

A second shift runs alongside it. Question 5 replaces reliance on "an officer of the company" with "an individual at the company," because the 2026 instructions dropped the officer requirement (JL13). The same pass deletes the question asking what percentage of total reserves rested on the work of others, along with the "made use of" and "not within the Appointed Actuary's control" framing. Comment JL28 moves that disclosure into the actuarial report, which must carry both the dollar amount and the percentage.

The two documents reach different readers. The opinion attaches to Page 1 of the Annual Statement; the actuarial report is retained for seven years and produced on regulatory examination. The redline widens what the signed opinion must cover, down to premium reserves the rescinded principles never addressed, while moving the one figure that sizes how much of it rests on somebody else's analysis into the file a statement reader never opens.

Further Reading

Sources