Actuarial Notes

Premium Deficiency Reserves Discussion Paper

By Premium Deficiency Reserves Work Group of the Health Practice Financial Reporting Committee · American Academy of Actuaries · 2007

Study guide: Exam GH-201U

A March 2007 public policy paper of the American Academy of Actuaries on health premium deficiency reserves (PDRs). It was written to give insight into the testing for the need for a PDR, the manner in which a PDR, if needed, might be determined, and some details of its financial reporting; it describes practices the work group believes are commonly employed and is not a codification of generally accepted actuarial practice.

On the syllabus

I Introduction

II General PDR Background

  • A Purpose of PDRs
  • B General Principles Underlying the Calculation of PDRs
  • C Authoritative Guidance

III Financial Reporting Impacts

IV Specific Issues Regarding Assumptions and Calculations

  • A Interaction With Other Reserves
  • B Business To Be Included
  • C Contract Grouping
  • D Projection Period
  • E Premium Rate Changes
  • F Claims Projections
  • G Expenses
  • H Interest Rate
  • I Taxes
  • J Reinsurance
  • K Conservatism

V Other Considerations

VI Appendix I: Definitions

VII Appendix II: Selected PDR Authoritative Guidance

  • A ASB Authoritative Guidance
  • B GAAP Authoritative Guidance
  • C Statutory Authoritative Guidance

VIII Appendix III: Examples

  • A Business To Be Included
  • B Contract Grouping
  • C Projection Period

Sources