CAS Update Where We’ve Been, Where We Are and Where We’re Going Casualty Actuaries of Greater New York June 3, 2004

Agenda n CAS Centennial Goal n Two Important Task Forces n Research Working Parties n Educational Process n Getting Involved in CAS n CAS Web Site n Your input

CAS in 2014 The CAS will be 100 years old!

The Planning Horizon n Core Ideology u Core purpose F A concise statement of the organization’s reason for being u Core values F Essential and enduring tenets of the organization n Years: Envisioned Future u Big audacious goal n 5-10 Years: Critical Factors n 3-5 Years: Strategic Planning n 1-2 Years: Action Planning

Centennial Goal (March ‘03) The CAS will be globally recognized as the preeminent resource in educating casualty actuaries and conducting research in casualty actuarial science. CAS members will be recognized as the leading experts in the evaluation of hazard risk and the integration of hazard risk with strategic, financial and operational risk. The CAS will be globally recognized as the preeminent resource in educating casualty actuaries and conducting research in casualty actuarial science. CAS members will be recognized as the leading experts in the evaluation of hazard risk and the integration of hazard risk with strategic, financial and operational risk.

International Issues n Historically, CAS predominantly North American u 95% of members live and practice in North America u Many papers and syllabus materials use U.S. examples u Major meetings and seminars n “Preeminent global resource” u Support of CAS Members working abroad u Support basic education process in various countries u Exam waivers and mutual recognition u Practice rights for CAS members (Ireland, Australia, India) u Participation in international actuarial community

Risk Integration n Aspects of risk addressed by a multitude of professions u Financial, Operational, Hazard, Strategic n Actuaries can be uniquely positioned to integrate the risks u Tools in our Education Process u Professionalism n Coordinating activities with the SOA u Joint ERM Seminar summer ’03 (CAS led) u ERM and RCMS merge in ’04 under CAS leadership u In conjunction in ’04 with GA State Bowles Research Symposium

Implementing the Centennial Goal n Traditionally Vice Presidents and Committee Chairs have annual goals u To do list u Only occasionally connected to long range plans n LRPC working with other CAS leaders to change our short- and medium-term planning processes u Does my goal support the Centennial Goal? u What does my committee need to be doing in the next three years to support the Goal?

CAS Board n This is where policy is made n Board meets 4 times per year u May and November at the CAS meetings u March and September n Board meetings are open to the membership! u Come and see how decisions are made in the CAS u Next Board Meeting – Sept. 9-10, Niagara Falls

Two Important Task Forces n Classes of membership u How many classes should the CAS have? u How should these classes be defined? n What governance rights should ACAS’s have in the CAS? u Vote? All ACAS’s? After N Years? u Chair committees? Which ones? u Serve as a VP? u Serve on the Board?

Historical Perspective on Associates n Since inception, two classes of membership n Associate/Fellow designations have changed over the years u Initially, company responsibilities u Beginning in 1915, exams F Number and content of exams has changed F Two exam differential today is lowest ever n For 70%, designation of Associate is temporary; the remaining 30% will not complete the Fellowship exams and are/will be career Associates

Task Force on ACAS Governance Rights n Right to vote should be given to members upon attainment of Fellowship or five years after they are recognized as Associates, whichever comes first. Right to vote should be unrestricted. n All voting members should be allowed to stand for the Board of Directors n Voting Associates may hold all officer positions, with the exception of: u President / President Elect u Vice President - Admissions n Committee Membership is to remain restricted to Fellows for: u Discipline u Education Policy u Syllabus

Classes of Membership Task Force n Task Force recommendations include: u One and only one class of membership - Fellowship u Certificate of Achievement in Casualty Actuarial Science u Bring all candidates under the Code of Professional Conduct u Transitional Issues F Current Associates Automatic Transition (Preferred)Automatic Transition (Preferred) Completion of some Additional Requirement(s)Completion of some Additional Requirement(s) F Students on the Road to ACAS Continue to offer Associate designation until 2008Continue to offer Associate designation until 2008 u Retain common set of examinations (ideally 8 exams total) n Action expected at September Board meeting

Research Working Parties n Traditional CAS Approach u Focused on individual research u Call paper programs F No interaction among researchers n Working Parties u Focused topic u Collaborative, interactive process u Short (1 year) time frame with report at next meeting u First parties formed at CLRS ‘03

Changes to Preliminary Education n Current u Prerequisites: Linear Algebra and Statistics u Exam 1: Calculus and Probability (4 hours) u Exam 2: Interest Theory, Economics, Finance (4 hours) u Exam 3: Actuarial Models– NOT JOINT (4 hours) u Exam 4: Actuarial Modeling (including Applied Stats) (4 hours)

Changes to Preliminary Education Approved March 2004 Board Meeting n Starting Spring 2005 u Prerequisites: Linear Algebra and Calculus u Exam 1: Probability (with Supporting Calculus) (3 hours) u Exam 2: Interest Theory (2 hours) u Exam 3: Actuarial Models & Statistics – NOT JOINT (4 hours) u Exam 4: Actuarial Modeling (4 hours) u Validation by Educational Experience: Economics, Finance, Applied Statistics

Validation by Educational Experience n Option 1: Submit a grade of B- or better on approved courses u Micro and Macro Economics u Intermediate Corporate Finance u Regression and Time Series (could be separate courses) n Option 2: Pass an appropriate exam, such as the AP exams for Economics, CFA exams, etc. n Option 3: Pass exams offered by the CAS. CAS is committed to offering these for at least 2 years n Option 4: Other experiences u College distance-learning courses u Courses/seminars designed specifically for VEE credit

Transition n 2000 Syllabus u Exam 1  Exam 1 u Exam 2  Exam 2 + VEE for Economics & Finance u Exam 3  Exam 3 u Exam 4  Exam 4 + VEE for Applied Stats n Pre-2000 Syllabus u Part 3A  VEE for Applied Stats u Part 4A  Exam 2 u Part 4B  Exam 4 u Part 5A  VEE for Economics u Part 5B  VEE for Finance

Why VEE? n Most candidates take Economics and/or Finance u No need to examine topics that require background but not mastery u But verification is needed to meet international standards n Exam questions for Applied Stats stress memorization rather than application u Our candidates need to learn how to appropriately apply regression and time series models to real data u This competency cannot easily be validated in a timed paper-and-pencil exam

Impact on Travel Time n Actuarial Science majors often graduate with two or more exams u Unlikely to have much effect on these candidates n Other majors who take VEE courses in school benefit n Candidates who did not have VEE courses in school u Can tackle VEE while studying for interest exam u Or between exam “seasons” u VEE pass rates on first attempt should be very high F Increases predictability of travel time

Other Ways to Reduce Travel Time n Computer Based Testing u Targeting 2005 pilot for Exam 1 u Expand to 4-6 computer-based administrations in 2006 u Candidates will receive results immediately (beginning in 2006) u Will expand to other exams if successful n Approved May 2004 Board Meeting. Awaiting approval by SOA.

Other Ways to Reduce Travel Time n More Efficient Study Material u Too much material not written for study purposes u Institute of Actuaries (UK) hired one vendor to produce all study material F Material written specifically for study purposes F Enabled increased pass rates despite expanded syllabus breadth u CAS Task Force determined that this could work for us u Syllabus Committee charged to try this on a pilot basis

Modeling Workshop n Education in Risk Integration Techniques is consistent with Centennial Goal u DFA added to Syllabus in 2000 u DFA taken off Part 8 in 2003 due to inability to test in a paper-and-pencil environment n Modeling Workshop Task Force established u Pilot a hands-on workshop experience in late 2004 u Consider adding this as a future FCAS requirement and/or continuing education opportunity

Getting Involved in CAS n Why: u Learn u Make useful contacts u Contribute to your profession n How: u Pick committees/topic(s) that interest you most u Respond to Participation Survey or contact committee chair directly u Join a working party u Write papers u Give presentations u Regional Affiliate involvement

CAS Web Site ( n Syllabus, study materials, past exams, study notes n All PCAS (1914), CAS Forums (1987) and Discussion paper programs (1979), ASTIN Journals n ASOPs, Casualty Reserve Practice Note n Discussion forum n Member Services: u Membership Directory u CAS Board Q&A u Board minutes

We welcome your input regarding... n Centennial Goal n CAS role internationally n CAS role outside traditional p/c insurance n Exams and Education Process n Travel time n Membership n Research working parties n What’s on your mind? n Questions?

THANK YOU !!!!!