What does the Opinion paragraph contain?

• A. Whether the opinion is for losses & LAE combined or separately
• B. Whether the reserves satisfy the insurance laws of the state in which the insurer is domiciled
• C. The identity of the actuary that the appointed actuary relied on for a material portion of the reserves covered by the scope
• D. Degree of variability or if a reasonable fluctuation can have a material impact on surplus

Answer: (A)

The thing being tested is how the opinion is framed in an appointed actuary report. The Opinion paragraph is where the actuary specifies the scope of the opinion, specifically whether it covers losses and loss adjustment expenses (LAE) together or separately. This tells the reader exactly what reserves the opinion is addressing: are losses and LAE treated as a single combined figure, or are they evaluated and stated as separate components? That scope definition is essential for interpreting the opinion correctly, and it’s the purpose of the paragraph itself.

Other items you might see elsewhere in the report—such as compliance with state insurance laws, the identity of any actuaries relied upon, or discussion of how variability could affect surplus—belong in different sections (scope/reliance, statutory compliance, or risk commentary) and are not part of the Opinion paragraph.