n 2024 I joined the CAS Professionalism Education Working Group (PEWG). Similar to many actuaries I talk to, I never found professionalism to be the most captivating continuing education (CE) topic. Getting my mandatory credits every year always bordered on being a chore. I felt transitioning from a CE consumer to a CE supplier might challenge me to think about professionalism more critically and in new and interesting ways. Fast forward to March 2026 and, sure enough, it did (with a big assist from Mother Nature)!

Earlier in the year, PEWG leaders reached out to volunteers like me seeking professionalism presenters for the Ratemaking, Product, and Modeling seminar (RPM), which I already planned to attend. One of the requested topics was “professionalism for climate risk.” My initial question was, what does climate risk have to do with professionalism? To learn the answer, I raised my hand to co-present with Michael Chen, FCAS, of Pinnacle Actuarial Resources. We soon learned the answer was “just about everything.”

My flight to RPM in Chicago was massively delayed by Winter Storm Iona, a record-breaking storm system that dumped 52 inches of snow on parts of Michigan, caused wind gusts of 60 mph in Wisconsin,¹ spawned tornados and thunderstorms across the U.S. South,² and cancelled thousands of flights in addition to mine. The “snowmagdeddon” event provided an opportunity to stress test our topic in real time. Michael and I had already reviewed prior presentations on “climate professionalism” and most were rote rundowns of Actuarial Standard of Practice (ASOP) No. 38 on catastrophe modeling³ and ASOP No. 39 on treatment of catastrophe losses in P&C ratemaking.⁴ The refreshers didn’t exactly contemplate the deadly bomb cyclone that, based on our straw poll of the in-room audience, had just affected almost everyone’s arrival to the conference. So we freshly unpacked ASOPs No. 38 and 39 through the lens of Iona, via four questions:

1. Was Iona a climate event? Probably. This fell a bit outside the purview of the ASOPs, but it was required to scope Iona into our assigned topic. Significant evidence suggests climate change contributes to increased frequency of bomb cyclones due to increased atmospheric moisture and weaker temperature contrasts across latitudes.⁵ However, the meteorological community has recoiled a bit at the impact of “runaway verbiage” (e.g. hyperbolic terms such as “bomb”) on public perception.⁶ Perhaps the meteorological community could benefit from a read of ASOP No. 41 on actuarial communications, which speaks to factors such as use of analysis by unintended users.
2. Was Iona a catastrophe? Yes. ASOP No. 39 defines catastrophe as “a relatively infrequent event or phenomenon that produces unusually large aggregate losses” (2.1). Required characteristics are either the potential to display contagion (3.1.a), infrequent occurrence (3.1.b), or both. We deemed bomb cyclones’ frequency of a dozen per year as debatable, but Iona’s contagion, i.e. “lack of independence between the occurrence of losses among different entities” as undeniable based on our audience’s experience.
3. Should Iona be included pro forma in ratemaking? Probably not. This got to the heart of our topic — the nexus between professionalism and climate change. Iona’s diverse peril profile — thunderstorms, tornadoes, blizzards⁷ — at a minimum stretched actuaries’ ability to precisely associate losses with the event and implement a “consistent definition of a catastrophe” (3.3.1f). It is also debatable whether Iona’s impacts would equally impact existing procedures’ ratemaking covariates (3.3.1.b.1) or, if not, whether corrective action was required or even possible with historical data (3.3.1.b.1-2). One example we gave was business interruption waiting periods. The audience’s flight delays ranged from hours to days, so if we viewed commercial insurance interruptions as potentially having comparable durations, then the range of waiting periods in one’s data would drastically impact the reasonability of passing Iona through pro forma.
4. What alternatives exist to including Iona pro forma? Imperfect ones. ASOP No. 39 presents catastrophe provisions based on historical data or modeled losses as potential cures to bias from catastrophe absence or presence in one’s data period (3.4). Both are relatively common in practice. Given its peril profile, Iona was likely represented by multiple catastrophe models — for example, severe convective storm (SCS) or winterstorm⁸ — and may have also induced non-modeled perils. ASOP No. 38 challenges actuaries to understand the relationship between models’ input and output, precision, component interrelationships, and more (3.3). The practicality of doing so at the breadth of an event like Iona deteriorates. Conversely, more tractable, “non-modeled” approaches such as “excess procedures”⁹ raise questions over the length of the experience period (ASOP No. 39, 3.3.1.d) and whether “compatible, comparable historical insurance data” exists (3.3.1.b). It may not make sense to smooth Iona over a longer-term period that predated increased occurrence of bomb cyclones or current building standards. Actuaries may also consider whether such smoothed losses are congruent with corresponding trend procedures (3.3.1.e and ASOP No.13).

Given that they are principles-based, ASOPs do not usually lend to concrete or even satisfying answers to our questions above. Events such as Iona provide the opportunity to evaluate potential areas for growth. Since I joined PEWG, I have been reading the ASOPs more, including appendices which reflect contemporaneous comments on exposure drafts and subsequent responses and adaptations by the Actuarial Standards Board (ASB). It is encouraging to see how the ASB adapts their work to practitioner feedback, but comments dismissed with prejudice are intriguing to revisit in light of current events.

One comment on ASOP No. 39 indicates “adjustments [to past insurance data] are impossible to do adequately, giving false hope that meaningful results can be obtained,” making special mention of the breadth of potential catastrophic perils besides earthquake and hurricane. Another suggests ASOP No. 39’s directive to “determine the extent to which the available insurance data are representative of the long-term frequency and severity of the perils or events … that produced the catastrophe losses” (3.3.1.a) is beyond a typical actuary’s capability. This feedback beautifully foreshadowed the present conversation.

The ASB’s responses to these questions put responsibility back on the shoulders of practicing actuaries. Its dismissal of the first comment indicates that the ASOP “gives sufficient freedom for the actuary to demonstrate the appropriateness of the resolution of the issues.” Its dismissal of the second retorts “the actuary could become aware of the issues by referring to [outside] experts and make intelligent decisions about the representativeness of the data.” If so, would it make sense for the pertinent considerations to be promoted out of the appendix? Moreover, for long-standing methodologies like those discussed above, it is easy to assume passing the test of time equates to passing the tests of the standards. But is it any safer to assume this than to assume that one’s flight will land at RPM precisely at its estimated time of arrival? Michael’s and my remarks tended that this is likely not the case, particularly as 100-year events become decadal¹⁰ and market responses such as shared and layered (S&L) pricing tend more toward casualty approaches — focusing heavily on attachment points and severity trend leveraging¹¹ — than a typical, ground-up property rate-up.¹²

Iona was just one of the topics Michael and I unpacked on a blustery St. Patrick’s Day in Chicago, and ASOPs No. 38 and 39 were just two of the ASOPs we reviewed. We also illustrated how climate change activates clauses in ASOPs up, down, and across various practice areas and specializations. Similar to Iona, we exposed this using current events. Our goal was certainly not to confer a precise, “professionally approved” approach to any of the novel events climate change inflicts on actuaries’ data. Rather, it was to remind actuaries that — the best check on one’s professionalism — rather than reading an ASOP or streaming a NotebookLM while waiting for a flight is often to stress test the ASOPs using a current event. I might even go so far as to suggest actuaries do so without delay.