DEPARTMENT OF REGULATORY AGENCIES
Division of Insurance
3 CCR 702-3
FINANCIAL ISSUES
Proposed Amended Regulation 3-1-3
CONCERNING ACTUARIAL OPINIONS

Section 1	Authority
Section 2	Scope and Purpose
Section 6 	Requirements/Limitations On Domestic Company Opinions 
Section 10 	Effective Date 
Section 11 	History 
Section 1 	Authority 
This regulation is promulgated under the authority of §§ 10-1-109, 10-5-117, 10-6-129, 10-16-109, C.R.S. 
Section 2 	Scope And Purpose 
The purpose of this regulation is to improve the Colorado Insurance Division's surveillance of the financial condition of companies, for the protection of all policyholders, contractholders and the general public, by requiring an annual opinion of a qualified actuary as to the adequacy of a company's reserves and other actuarial items which ought to be established in the required annual statement filings. 
Section 6 	Requirements/Limitations On Domestic Company Opinions 
Opinions submitted for Colorado domestic companies must comply with the following: 
F.	Actuarial Opinions submitted by health insurers or HMOs who have entered into any kind of risk-sharing, usually contractual, arrangements with provider groups providing medical services to enrollees shall include comments as required by Actuarial Standard of Practice No 16 and § 10‑16‑705(5)(a) C.R.S.  For all health insurers and Health Maintenance Organizations (HMOs), the Statement of Actuarial Opinion shall include a statement that the opining actuary has considered the impact of any risk-sharing arrangements with provider groups on health claim liabilities.  If the insurer or HMO has entered into any kind of risk-sharing, usually contractual, arrangements with provider groups providing medical services to enrollees, then it is expected that the opining actuary evaluate these arrangements, and the financial position of each contracting entity.  In the development and calculation of health claim reserves and other related actuarial items, due regard shall be given to the types and scopes of these arrangements, and the financial position of each contracting entity, including, but not limited to, the following:
1.	Ultimate responsibility for payment of all billed medical services in the event of nonpayment by, or insolvency of, the contracting entity, as required under §10-16-705(5)(a), C.R.S.;
2.	Extent to which these arrangements contain provisions for uncovered expenditures;
3.	Amount of the health claim liabilities allocated for uncovered expenditures;
4.	Existence of any stop-loss provisions;
5.	Retroactive settlements beyond the scope of the contracts;
6.	Financial position of each capitated entity.  In addition to the statement required below, the Actuarial Opinion should disclose the actuary’s knowledge of, and make appropriate provision for, any financially insolvent or troubled provider group that may have a material effect on the health claim liabilities;
7.	Existence of any contractual incentive payments; and
8.	Existence of any risk-sharing arrangements that involve a year-end settlement process.
The annual Statement of Actuarial Opinion should include a statement such as:
“In establishing the health claim reserves and other related actuarial items, I have evaluated and considered the impact of any and all risk-sharing arrangements with provider groups, as required under Subsection (6)(F) of Colorado Insurance Regulation 3-1-3.”
If no such risk-sharing arrangements exist, the annual Statement of Actuarial Opinion should include a statement such as:
“I am aware of the requirements of Subsection (6)(F) of Colorado Insurance Regulation 3-1-3, and I am not aware of any risk-sharing arrangements which would have an impact on the amount of health claim reserves and other related actuarial items which have been established.”
If any liability has not been established in accordance with this subsection, the Actuarial Opinion should disclose the nature of the deviation from this subsection, and the rationale and the effect of such deviation.
G.	Any HMO whose sole business is providing health care services to recipients under the “Colorado Medical Assistance Act”, Articles 4 to 6 of Title 25.5, C.R.S., “The Children’s Basic Health Plan”, Article 8 of Title 25.5, C.R.S., or Medicare under Title XVIII of the federal “Social Security Act”, as amended, shall also include the following statement in the annual Statement of Actuarial Opinion, “The company’s surplus level and outstanding claims liability meet the requirements of §10-16-411 (1.5), C.R.S.”  
Section 10 	Effective Date 
This regulation is hereby amended and restated and shall be effective for any Statement of Actuarial Opinion filed with the Colorado Division of Insurance after October 1, 2007on February 1, 2007. 
Section 11	History

New Regulation 90-1, effective December 31, 1994.
Amended Regulation, effective August 31, 1998. 
Amended Regulation, effective December 1, 2005. 
Amended Regulation, effective February 1, 2007.
Amended Regulation, effective October 1, 2007.