Actuarial Notes

2024 Guidance to the Appointed Actuary and Valuation Actuaries of Property and Casualty Insurers

By Canadian Institute of Actuaries · 2024 · 224092

Study guide: Exam 6C

A CIA educational note guiding the Appointed Actuary and valuation actuaries of P&C insurers on valuing 2024 year-end insurance contract liabilities. Prepared by the Committee on Property and Casualty Insurance Financial Reporting, approved for distribution by the Actuarial Guidance Council on August 13, 2024 and dated September 3, 2024 (document 224092), it has seven sections of guidance on recent and emerging issues and an appendix of relevant educational notes and reference documents. The CIA archived it on October 14, 2025.

On the syllabus

  • Exam 6C — objectives C1–C5; the whole note.

Preamble

  • Process
  • Guidance to members on specific situations
  • Your feedback
  • Guidance from the 2023 edition that is still appropriate is duplicated and labelled unchanged; guidance revised for recent developments or clarity is labelled modified.

1 Introduction (unchanged)

  • The note reviews relevant standards of practice and educational notes and discusses current issues affecting the work of actuaries; the appendix links the CIA, OSFI and AMF documents it references.

2 Standards of practice (modified)

  • IFRS 17, published by the IASB in June 2020, applies to fiscal years beginning on or after January 1, 2023, and the Canadian Accounting Standards Board incorporated it into Canadian GAAP without modification.
  • References are to the Rules of Professional Conduct effective January 1, 2024 and the Standards of Practice effective June 1, 2024; the note directs attention to subsection 1240 (Materiality), Sections 1400–1700, and Sections 2100–2500 on insurance contract valuation, the Appointed Actuary and financial condition testing.

3 Recent guidance (modified)

  • Lists the guidance recently published for year-end valuation and FCT work: IAN 100, released by the CIA as an educational note in October 2021, and the CIA's IFRS 17 educational notes and explanatory reports.
  • The 2024 discount rates note's most significant change is to subsection 12.4 (unwinding claims incurred in the current period); the 2024 risk adjustment note's is Appendix 3, quantifying the confidence level using the MCT.
  • Discounting consideration: a CLIFR subcommittee recalibrates the CIA reference curve parameters annually, and the 2024 review made no changes.
  • Role of the Appointed Actuary: the revised opinion states that the valuation is for inclusion in IFRS financial statements, so it must comply with applicable accounting standards, and more reconciliation and validation may be required.
  • IFRS 17 restated opening balances: the AA needs to be fully comfortable with the opening balances of both the first fiscal year of implementation and the previous fiscal year (Transition to IFRS 17).

4 Upcoming guidance (new)

  • Section 8 (MCT considerations) of the liability for remaining coverage note is expected to be updated with more content and examples on the MCT margin for unexpired coverage.

5 Financial condition testing (modified)

  • The January 2023 FCT educational note is adapted to IFRS 17, expands on adverse scenario selection, going concern scenarios, ripple effects and management actions, and adds expense, climate-related, and technology and cyber risk to the major P&C risk categories.
  • The Standardized Climate Scenario Exercise run by OSFI and the AMF is separate from the annual FCT and does not affect the consideration of a climate change scenario in an FCT.

6 Regulatory guidance (modified)

  • 6.1 Office of the Superintendent of Financial Institutions requirements (modified)
    • The 2024 OSFI Memorandum merged the life, P&C and mortgage memoranda and replaced detailed prescription of the Appointed Actuary's Report with principles.
    • Guideline E-15 requires a full peer review of the AAR and the FCT report at least once every three years, and material changes to be reviewed and reported on annually.
    • Also covered: Guideline B-9 (earthquake exposure data filed by May 31), Guideline B-15 on climate risk management, the Standardized Climate Scenario Exercise (submissions due December 20, 2024) and draft Guideline E-23 on model risk management.
  • 6.2 Autorité des marchés financiers (modified)
    • The AMF issues annual guides for the insurance contract liabilities report and the FCT of Quebec-chartered insurers, published its Climate Risk Management Guideline in July 2024, and prescribes no standardized stress test this year.

7 Emerging issues and other considerations (modified)

  • 7.1 Product reforms (modified)
  • 7.2 Recent judicial, legislative, regulatory and political events (modified)
    • Regular communication with claims professionals covers recent court decisions and legislative, regulatory and political changes; actuaries also consider tax changes and the proposed excess profit provision framework of Alberta's Automobile Insurance Rate Board.
  • 7.3 Catastrophic events (unchanged)
    • An event catastrophic industry-wide may not be catastrophic for a given insurer; actuaries consider its effect on post-event inflation, the payment pattern, ULAE estimates and risk adjustments.
  • 7.4 Macroeconomic environment (modified)
    • An increase in the CPI does not necessarily translate point for point into insurance loss costs; actuaries may consult experts and external inflation indices, and consider sensitivity analyses.
    • Age-to-age factors capture past inflation when it is stable, but for long-tailed lines the development method may not be appropriate after sudden changes, and methods such as the Berquist-Sherman method adjust the triangles.
    • Also considered: higher pre-judgment interest, a recession's effect on policyholder behaviour, and the sharp increase in auto theft in several cities.

Appendix – References

Related readings

  • CIA CSOP — the Standards of Practice, whose sections Section 2 lists
  • CIA Materiality — the CIA task force report on materiality (October 2007), listed in the appendix
  • CIA Subsequent Events — listed in Section 3 as recent guidance (August 2023)
  • CIA Duration — listed in Section 3 as recent guidance (August 2023)
  • CIA IFRS 2 — the risk adjustment note (August 2024), whose Appendix 3 change Section 3 describes
  • CIA Appointed Actuary — Role of the Appointed Actuary Under IFRS 17 (December 2022), discussed in Section 3
  • CIA IFRS 17 - LRC — listed in Section 3; Section 4 expects its Section 8 to be updated
  • CIA PAA — listed in Section 3 as recent guidance (June 2022)
  • CIA IFRS 17 - Comparison — listed in Section 3 as recent guidance (June 2022)
  • CIA Models — Use of Models (January 2017), listed in the appendix
  • OSFI Memorandum — the 2024 OSFI Memorandum, discussed in Section 6.1
  • OSFI AA — Guideline E-15, discussed in Section 6.1
  • OSFI Earthquake — Guideline B-9, discussed in Section 6.1
  • OSFI Climate — Guideline B-15 (March 2023), discussed in Section 6.1

Sources