Webinar on the Exposure Draft of CAS Continuing Education Policy December 4, 2008 10:30 – 11:00 a.m. EST

Speakers Christopher S. Carlson, Chair of the CAS Board of Directors and Consultant, Pinnacle Actuarial Resources, Inc. J. Scott Bradley, Chair of the CAS Continuing Professional Development Task Force, and Consultant, Ascendant Risk Services

Background November 2007 – CAS Board forms Continuing Professional Development Task Force. June 2007 – Task Force presented preliminary report to the Board. September 2008 – Board approved a motion to release an Exposure Draft of CAS Continuing Education Policy. October 2008 – Executive Council releases Exposure Draft to allow members to comment on the Policy. Let’s start with some background. At the November 2007 Board meeting, the Board formed the Continuing Professional Development Task Force, which is chaired by Scott Bradley. The Task Force was charged with exploring the need for a minimum continuing education requirement for all members. In June, the Task Force presented a preliminary report to the Board and at the September Board meeting, the Board approved a motion to release an Exposure Draft of CAS Continuing Education Policy. The Executive Council then released the Exposure Draft to allow members to comment on the Policy. The proposed Continuing Education Policy represents a significant milestone in ensuring that our members stay relevant and accountable to their principals. I look forward to hearing your comments on the Exposure Draft. And with that, I’ll turn it over to Scott.

CAS Code of Professional Conduct PRECEPT 2. An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience and only when the Actuary satisfies applicable qualification standards. ANNOTATION 2-1. It is the professional responsibility of an Actuary to observe applicable qualification standards that have been promulgated by a Recognized Actuarial Organization for the jurisdictions in which the Actuary renders Actuarial Services and to keep current regarding changes in these standards. Let’s start with Precept 2 of the Code of Professional Conduct: An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education. The CAS operates as an international body, relying on the national associations with jurisdiction where its members practice to establish qualification and practice standards. The Code explicitly requires that CAS members meet the requirements set by a recognized actuarial organization having jurisdiction where the member practices. The annotations to the Code specifically recognize the jurisdiction of the CIA and the AAA in this regard in Canada and the United States. It would seem appropriate, then, that the CAS simply continue to rely on the national associations to set qualification standards, including CE requirements. However, there are a number of jurisdictions where there is no national body or where there are few or no national CE requirements. This is the primary reason why the Task Force concluded and the Board agreed that the CAS should set minimum CE requirements for its members.

How are CAS Members Affected? CAS members who issue Statements of Actuarial Opinion: Would be required to follow local qualification standards or, in cases where no local standards have been established, with the CAS standards. The local qualification standards in the U.S. are the AAA standards. Local standards in Canada are the CIA standards. So, how are CAS members affected? The Code of Conduct requires that members be qualified in order to practice. It poses no requirement on members who do not practice. Therefore, it is appropriate that a CAS CE requirement be limited to those members who practice as actuaries. In other words, the CE requirement is a practice requirement, not a membership requirement. This is consistent with the AAA qualification standard effective January 1, 2008. About 87% of CAS members reside and presumably practice in the United States and another 7% reside and presumably practice in Canada. The US CE requirements in the AAA qualification standards are robust, and the CIA requirements are also rigorous. So CAS members who issue Statements of Actuarial Opinion and who are practicing in the U.S. or Canada would be required to comply with the AAA or CIA qualification standards. CAS members who issue Statements of Actuarial Opinion who are practicing outside the US or Canada would be required to follow local standards or, in cases where no local standard has been established, with the proposed CAS standards.

What are Statements of Actuarial Opinion? An opinion expressed by an actuary in the course of performing Actuarial Services and intended by that actuary to be relied upon by the person or organization to which the opinion is addressed. For further guidance, please refer to the AAA Qualification Standards and supporting documentation. Before we get back to how members are affected, it would be helpful to define a key term. What are Statements of Actuarial Opinion? A “Statement of Actuarial Opinion” (SAO) is an opinion expressed by an actuary in the course of performing Actuarial Services and intended by that actuary to be relied upon by the person or organization to which the opinion is addressed. This is the same definition used by the AAA Qualification Standards. For further guidance as to what constitutes a Statement of Actuarial Opinion, please refer to the Qualification Standards and supporting documentation of the American Academy of Actuaries.

How are CAS Members Affected? A CAS member who is a member of another IAA full member organization may meet the continuing education requirements of that organization, provided that the requirements are of parallel rigor with the CAS requirement. The CAS recognizes the requirements of: American Academy of Actuaries Canadian Institute of Actuaries Institute of Actuaries and Faculty of Actuaries (UK) Institute of Actuaries of Australia Now, I’ll go into a little more detail on how CAS Members are affected. A CAS member who is a member of another IAA full member organization may meet the requirements of that organization, but there’s a caveat - the requirements must be of the same rigor as the CAS requirement. In addition to the AAA, the CAS has already agreed to recognize the requirements of: Canadian Institute of Actuaries Institute of Actuaries and Faculty of Actuaries (UK) Institute of Actuaries of Australia If you are not currently meeting the requirements of one of these organizations, then you need to familiarize yourself with the CAS Continuing Education requirements as stated in the Exposure Draft.

Documentation CAS members must keep appropriate documentation of their continuing education. Beginning with submission of their dues for 2010, members must report whether they expect to perform Actuarial Services in 2010, and if so, whether they have met the CE requirements. Beginning in 2010 (for statements issued in 2011), CAS members must maintain records of their continuing education. These records must be available for audit by the CAS. So it’s important that you meet the CE requirements, but it is equally important that you document your activities. As you can see on this slide, and again, this comes directly from the Policy, beginning with submission of their dues for 2010, members must report whether they expect to perform Actuarial Services in 2010, and if so, whether they have met the CE requirements. Also, beginning in 2010, CAS members must maintain records of their continuing education and these records must be available for audit by the CAS.

Timeline December 19, 2008 – Deadline for comments on the Exposure Draft. March 2009 – Board to formally adopt Policy. December 31, 2009 – The requirement would be applicable for all Statements of Actuarial Opinion issued after this date. I touched on a few implementation dates on that last slide, but there are a few milestones to get past first. Members and other interested parties are invited to comment on the Exposure Draft by December 19. You can find the Exposure Draft on the CAS Web Site, along with instructions for submitting comments. There is a link right on the home page. All comment letters will be considered and revisions may be made to the proposed policy based on the comments. Barring substantial comments from the membership, the Board is expected to adopt the proposed policy at its March 2009 meeting. And on December 31, 2009, the requirement would be applicable for all Statements of Actuarial Opinion issued after this date.

Questions and Discussion