Applicability Guidelines in Practice: A Reference Guide

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ach day we go to work, whether we’re consciously thinking of it or not, our actions are governed by ASOPs. To uphold quality and professional standards, we need to be mindful of the ASOPs relevant to the emails we write, analyses we perform, and reports we distribute. As of the date of writing this article, there are 52 active ASOPs. For some of these standards, it can be easy to see whether they apply to your area of practice. For example, a P&C reserving actuary wouldn’t find it particularly useful to review ASOP 2, Nonguaranteed Elements for Life Insurance and Annuity Products. However, for other standards it can be more ambiguous; in these cases, we can use the Applicability Guidelines (AGs) as a reference.

The AGs are published by the Council on Professionalism and Education of the American Academy of Actuaries and aim to help actuaries consider which ASOPs may provide guidance to them based on the scope of their role. These are not definitive statements on what generally accepted practices apply to a specific task and should not replace the actuary’s professional judgment. So where can you find these elusive AGs? They are on the American Academy of Actuaries website; just click on the Professionalism tab > Actuarial Standards of Practice > Applicability Guidelines. You can also get to them directly at https://actuary.org/resources/applicability-guidelines-for-actuarial-standards-of-practice/.

Even though the AGs will download as a spreadsheet workbook, it should really be read as a document consisting of five pages.

The first page, or tab, titled “Cover,” includes important information on when the last revision was performed. As of this writing, the document was last revised in October 2025.

On the second tab, titled “Introduction,” there are a few important definitions and comments on how ASOPs are referenced in the AGs. The most important thing to know is that the AGs only include ASOPs and is a tool to help us identify relevant ASOPs based on the work involved. It does not suggest references or give guidance regarding other publications, such as those produced by the Financial Accounting Standards Board or the National Association of Insurance Commissioners that may be important to actuaries working on particular assignments. Furthermore, other technical documents such as monographs, practice notes, or other informational resources from the American Academy of Actuaries will not be referenced.

After that, you will find four tabs, titled “Casualty, Life, Health, and Pension” — these are the four major practice areas, but we will of course only focus on the “Casualty” tab.

On the “Casualty” tab, we can find that work assignments are broken down in to seven major categories: 1) appraisals; 2) data management; 3) enterprise risk management; 4) expert advice, witness, and/or testimony; 5) financial analysis, projections, and reporting; 6) product development/ratemaking/pricing; and 7) reserving. Some of these include sub-categories, where you can drill down even more. And reading across the rows are the ASOPs that the actuaries should consider reviewing as they may be relevant to their work.

At the top of the page, you will find that there are three ASOPs that apply to all practice areas: ASOP 1, Introductory Actuarial Standard of Practice; ASOP 23, Data Quality; and ASOP 41, Actuarial Communications. We will briefly explore each of these common ASOPs that apply to all work assignments.

ASOP 1 replaces the prior “Introduction to ASOPs” and serves as the foundational standard for understanding how all actuarial standards operate in the U.S. It provides principles that apply across all ASOPs and carries the same authority as any other standard. ASOP 1 states that the ASOPs guide actuaries on what to consider, do, document, and disclose. ASOP 1 also states that ASOPs are principles-based and not prescriptive but makes recommendations on what the typical standards of practices are, including considerations that should be made.

When assessing the reserves for a large insurer, a consulting actuary may decide to not review the insurer’s personal auto physical damage reserve due to the size of the reserve and the short-tail nature of the line of business. As the actuary determined that a misstatement in these reserves wouldn’t influence the decision of an intended user, they are in compliance with ASOP 1.

ASOP 23 is the second ASOP that applies to all assignments in all practice areas. This ASOP covers data quality and applies when an actuary is selecting data, performing a review of data, and relying on data supplied by others when performing actuarial services. It also applies to selecting and preparing data that an actuary believes will be used by other actuaries, or when making appropriate disclosures with regard to data quality. When selecting data, an actuary is following best practices when they are considering the appropriateness of the data, consistency with relevant external information that is readily available and known, limitations of the data, and availability of additional and alternative data.

In their workday, a reserving actuary may use professional judgment to determine whether to review data for reasonableness and consistency. They determine that claim counts are defined as closed-with-pay plus open and that reopened claims are not coded as additional claims. They also summarize unresolved questionable negative incremental paid values and determine that this impact is immaterial. After doing this, they feel their review is sufficient and proceed to use the data.

A pricing actuary at the same company is given an assignment that uses data supplied by their colleagues in claims. Even though the accuracy and completeness of the data supplied by others are the responsibility of those supplying the data, the actuary still determines whether to review, and use, the data. After deciding to use the data, the actuary discloses this reliance in an appropriate actuarial communication.

ASOP 41 is the third ASOP that applies to all assignments in all practice areas. This ASOP covers actuaries who are issuing actuarial communications within any practice area. It does not apply to communications that do not include an actuarial opinion or other actuarial findings (e.g., brochures, fee quotes, or invoices). It does provide guidance for preparing actuarial communications, including those that may be required by the Qualification Standards or other ASOPs.

The performance of a specific actuarial engagement or assignment typically requires significant and ongoing communication between the actuary and the intended users.

The actuary should complete an actuarial report if they intend the findings to be relied upon by any intended user. The report should state the actuarial findings and identify the methods, procedures, assumptions, and data used with sufficient clarity that another actuary qualified in the same practice area could make an objective appraisal of the reasonableness of the actuary’s work as presented in the actuarial report.

A report should also include certain disclosures as appropriate: uncertainty of risk, any conflicts of interest, reliance on others, the responsible actuary, identification of actuarial documents, scope of the report, limitations, subsequent events, etc.

Of course, if the actuary departs from the guidance of this ASOP to comply with applicable laws, statutes, regulations, etc., the actuary should refer to Section Four regarding deviation.

You should be able to recognize similarities between the examples above and the tasks you routinely complete. While these three ASOPs span any role you’ll find yourself in, the AGs are a great resource to help you consider what ASOPs may apply more specifically to your role.

How often do you reference the AGs? We want to hear your thoughts at ar@casact.org.