Membership / Notices to Members

Comment Period for ASOP 39: Addressing Catastrophe or Extreme Event Losses in Future Cost Estimates – Comments Due by May 1, 2025

Actuarial Standard of Opinion Practice

The Actuarial Standards Board (ASB), part of the American Academy of Actuaries, has released an exposure draft for 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.”

Originally adopted in 2000, ASOP No. 39 was established to guide actuaries in evaluating catastrophe exposures and determining provisions for catastrophe or extreme event losses and loss adjustment expenses in property/casualty insurance ratemaking. However, significant advancements in ratemaking and modeling have emerged since then, which the current standard does not sufficiently address.

These advancements include new types of risks impacting casualty insurance or multiple insurance lines, such as cyberattacks, terrorism and climate change. The updated standard aims to address these evolving risks more comprehensively.

Additionally, the revision incorporates considerations from ASOP No. 53 (Estimating Future Costs for Prospective Property/Casualty Risk Transfer and Risk Retention), ASOP No. 56 (Modeling) and updates to ASOP No. 38 (Catastrophe Modeling for All Practice Areas). Key enhancements in the proposed revision include:

  • Expanding the scope to encompass both catastrophes and extreme events.
  • Broadening guidance for casualty coverages, catastrophe models and scenario analysis.

The deadline for submitting comments on the exposure draft is May 1, 2025. Details on how to submit feedback can be found in the exposure draft document.