Actuarial Standards Board News

The Actuarial Standards Board (ASB) of the American Academy of Actuaries approved an exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 39, now titled Treatment of Catastrophe or Extreme Event Losses in Future Cost Estimates for Property/Casualty Risk Transfer and Risk Retention. The ASB adopted ASOP No. 39, Treatment of Catastrophe Losses in Property/Casualty Insurance Ratemaking, in 2000 to provide guidance to actuaries in evaluating catastrophe exposure and in determining a provision for catastrophe or extreme event losses and loss adjustment expenses in property/casualty insurance ratemaking. 

Since this ASOP was adopted, there have been many developments in ratemaking and modeling that are not adequately addressed in the current standard such as events that impact casualty insurance or multiple insurance lines, or other events that the industry now faces, such as cyber-attacks, terrorism, and the effects of climate change. The standard is also being updated to recognize ASOP No. 53, Estimating Future Costs for Prospective Property/Casualty Risk Transfer and Risk Retention, and ASOP No. 56, Modeling, as well as changes to ASOP No. 38, Catastrophe Modeling (For All Practice Areas). Notable changes from the existing standard include broadening the scope to include both catastrophes and extreme events and expanding the guidance for casualty coverages, catastrophe models, and scenario analysis. 

The comment deadline is May 1, 2025. Information on how to submit comments can be found in the exposure draft.

The Actuarial Standards Board (ASB) of the American Academy of Actuaries adopted a new Actuarial Standard of Practice (ASOP) No. 58, Enterprise Risk Management. 

ASOP No. 58 replaces ASOP Nos. 46 and 47, Risk Evaluation in Enterprise Risk Management and Risk Treatment in Enterprise Risk Management, respectively, which were the first ASOPs applying specifically to actuaries performing actuarial services for the purposes of enterprise risk management (ERM). 

ASOP Nos. 46 and 47 were prepared when ERM as a field of practice for actuaries was in fledgling form, with a relatively small number of actuaries having experience in the area. However, in the years since, actuarial practice in the field has evolved considerably. Moreover, ERM nomenclature has also evolved. Thus, the ASB decided to replace ASOP Nos. 46 and 47 with a new ERM ASOP to better reflect today’s ERM practices and terminology, and to align with ASOP No. 55, Capital Adequacy Assessment. When ASOP No. 58 takes effect, ASOP Nos. 46 and 47 will be repealed. 

The first exposure draft was released in May 2023. The ASB received 15 comment letters. The second exposure draft was released in October 2024. Three comment letters were received. In addition to covering activities in an order that reflects how organizations typically establish an ERM framework, the new ASOP provides guidance on governance over risk processes, risk identification, risk classification, and considerations related to an organization’s own risk and solvency assessment. The effective date for ASOP No. 58 is May 1, 2025.

The comment deadline for the second exposure draft of ASOP No. 41, Actuarial Communications, has been extended from February 15, 2025 to March 15, 2025. The exposure draft can be viewed here.

The Actuarial Standards Board of the American Academy of Actuaries recently approved a second exposure draft of a proposed revision of Actuarial Standard of Practice (ASOP) No. 41, Actuarial Communications. The ASOP applies to actuaries when issuing actuarial communications in any form (written, electronic, or oral) within any practice area. The standard does not apply to actuaries when issuing a communication that does not include the rendering of actuarial services. 

The first exposure draft was released in June 2022 with a comment deadline of Nov. 1, 2022. Thirty-eight comment letters were received and considered in making changes that are reflected in the second exposure draft. Notable changes from the first exposure draft include adding definitions for “actuarial conclusions” and “actuarial report”; removing definitions for “actuarial finding” and “oral communications” and any related guidance on the latter; and adding guidance regarding the risk of misuse of actuarial communications as well as guidance regarding when to issue an actuarial report.

The comment deadline is Feb. 15, 2025. Information on how to submit comments can be found in the draft.

Read the latest news from the ASB Boxscore.