Actuarial Standards Board News

The Actuarial Standards Board (ASB) of the American Academy of Actuaries recently approved exposure drafts of proposed revisions of Actuarial Standard of Practice (ASOP) No. 45, The Use of Health Status-Based Risk Adjustment Methodologies, and ASOP No. 49, now titled Medicaid Managed Care Capitation Rates.

ASOP No. 45 applies to actuaries when performing actuarial services with respect to selecting or using health status-based risk adjustment models to quantify differences in morbidity across organizations, populations, programs or time periods. It does not apply to actuaries when designing, reviewing, or modifying health status-based risk adjustment models (including recalibration). The ASOP does not apply to actuaries when performing actuarial services related to programs that establish health-related obligations for an extended period of time. Notable changes from the existing ASOP include revising the scope to explicitly exclude actuarial services with respect to designing, reviewing, or modifying risk adjustment models; and revising guidance to better capture concepts related to quality and consistency of input data across organizations and time periods and with the data used to develop the models.

ASOP No. 49 applies to actuaries when developing, certifying, or reviewing Medicaid managed care capitation rates including, but not limited to, developing or certifying on behalf of a state to meet the federal requirements for actuarially sound capitation rates; developing or certifying on behalf of an MCO, if required as a component of a capitation rate bid or capitation rate acceptance; developing, certifying, or reviewing a department of insurance capitation rate filing; reviewing or opining on behalf of an MCO; and reviewing on behalf of a government agency. Notable changes from the existing ASOP include providing additional examples of the types of work that may be in scope without modifying the scope of the standard; and adding guidance on additional items the actuary should take into account when developing managed care adjustments.

The comment deadline for both drafts is Sept. 1, 2026. Information on submitting comments can be found in the drafts.

The Actuarial Standards Board (ASB) of the American Academy of Actuaries released its 2025 Annual Report, which highlights the board’s accomplishments throughout the year, including approving exposure drafts of ASOP Nos. 6, 20, and 30 for comment and adopting revisions to ASOP Nos. 7 and 20. In addition, the ASB continued development of nine other new or revised ASOPs and approved three proposals to revise ASOP Nos. 8, 43, and 52.

Read the latest news from ASB Boxscore.

The Actuarial Standards Board (ASB) of the American Academy of Actuaries recently approved second exposure drafts of Actuarial Standard of Practice (ASOP) No. 30, now titled Profit Provisions, Contingency Provisions, and the Cost of Capital in Property/Casualty Risk Transfer and Risk Retention, and ASOP No. 39, now titled Treatment of Catastrophe or Extreme Event Losses in Future Cost Estimates for Property/Casualty Risk Transfer and Risk Retention.

ASOP No. 30 provides guidance to actuaries when performing actuarial services with respect to developing or reviewing profit provisions and contingency provisions that are included in future cost estimates for all forms of prospective property/casualty risk transfer and risk retention. The first exposure draft was released in July 2024 and received nine comment letters that were considered in making changes that are reflected in the second exposure draft. Notable changes made to the second exposure draft include modifying definitions of “contingency provision,” “profit provision,” and “risk margin”; adding guidance regarding the interaction of different provisions, as well as the intended purpose and intended measure of the future cost estimate; expanding guidance on profit provision; and modifying guidance on contingency provisions.

ASOP No. 39 provides guidance to actuaries when performing actuarial services with respect to analyzing, determining, or reviewing future cost estimates for catastrophe losses and loss adjustment expenses for property/casualty risk transfer or risk retention. The first exposure draft was released in February 2025 and received 10 comment letters that were considered in making changes that are reflected in the second exposure draft. Notable changes made to the second exposure draft include removing the definition of “extreme event”; revising the definition of “catastrophe,” which now includes extreme events; and adjusting language accordingly throughout the standard. In addition, the definition of “catastrophe model” was modified to explicitly include “deterministic scenario analyses” and guidance on “adjusting catastrophe model output” was added.

The comment deadline for both drafts is July 1, 2026. Information on how to submit comments can be found in the drafts.