1. Course on Professionalism Actuarial Organizations and Qualification Standards

2. 2 Discussion Topics Professional Actuarial Organizations Professional Actuarial Organizations Statements of Principles & Standards of Practice Statements of Principles & Standards of Practice AAA Qualification Requirements (including Continuing Education) AAA Qualification Requirements (including Continuing Education) CAS Continuing Education Requirements CAS Continuing Education Requirements Applicability Guidelines Applicability Guidelines

3. 3 Casualty Actuarial Society The Purpose of the Casualty Actuarial Society is: The Purpose of the Casualty Actuarial Society is: To advance the body of knowledge of actuarial science in applications other than life insurance To advance the body of knowledge of actuarial science in applications other than life insurance To establish and maintain standards of qualification for membership To establish and maintain standards of qualification for membership To promote and maintain high standards of conduct and competence for the members To promote and maintain high standards of conduct and competence for the members To increase the awareness of actuarial science” To increase the awareness of actuarial science”

4. 4 American Academy of Actuaries The Academy is a professional membership, government information, and public relations organization for all actuaries practicing in the United States, regardless of specialty The Academy is a professional membership, government information, and public relations organization for all actuaries practicing in the United States, regardless of specialty The Academy establishes qualification standards for making public statements of actuarial opinion The Academy establishes qualification standards for making public statements of actuarial opinion Professional standards of practice and discipline procedures are the responsibility of the Actuarial Standards Board (ASB) and the Actuarial Board for Counseling and Discipline (ABCD), respectively, both independent entities within the Academy Professional standards of practice and discipline procedures are the responsibility of the Actuarial Standards Board (ASB) and the Actuarial Board for Counseling and Discipline (ABCD), respectively, both independent entities within the Academy In Canada, the CIA serves this role In Canada, the CIA serves this role

5. 5 Statements of Principle vs. Standards of Practice Statement of Principle : Statement of Principle : A general or fundamental rule or truth on which others are based A general or fundamental rule or truth on which others are based Principles are expected to be relatively constant Principles are expected to be relatively constant Standard of Practice : Standard of Practice : Define the generally accepted actuarial practices Define the generally accepted actuarial practices Standards are expected to change over time in order to remain current Standards are expected to change over time in order to remain current

6. 6 Focus of Standards Indicate how fundamental concepts & methodological principles should be applied in a variety of circumstances Indicate how fundamental concepts & methodological principles should be applied in a variety of circumstances  Five “Areas of Practice” within ASB, each with its own operating sub-committee, charged with developing & reviewing appropriate Actuarial Standard of Practice (ASOP): Casualty Casualty Health Health Life Life Pension Pension General General

7. 7 Standards of Practice Standards of professional performance and behavior Standards of professional performance and behavior Developed to meet the expectations of users of the professional services Developed to meet the expectations of users of the professional services Provide guidance for Provide guidance for Dealing with commonly encountered problems Dealing with commonly encountered problems Handling new problems & non-routine situations Handling new problems & non-routine situations Ensure the high quality of professional services Ensure the high quality of professional services

8. 8 Actuarial Standards Board The ASB’s objectives are: 4 Direct and manage the development of actuarial standards of practice by its operating committees in all areas of actuarial practice 4 Expose and promulgate actuarial standards of practice within its sole discretion and pursuant to such procedures it deems appropriate, in all areas of actuarial practice 4 Provide continuous review of existing standards of practice and determine whether they are in need of amendment, alteration, expansion, or elimination

9. 9 Relationships Between Standards and Statements IS AFFILIATED WITH CASUALTY ACTUARIAL SOCIETY CASUALTY ACTUARIAL SOCIETY STATEMENTS OF PRINCIPLES STATEMENTS OF PRINCIPLES STANDARDS OF PRACTICE STANDARDS OF PRACTICE ACTUARIAL STANDARDS BOARD ACTUARIAL STANDARDS BOARD AMERICAN ACADEMY OF ACTUARIES AMERICAN ACADEMY OF ACTUARIES PROMULGATES ARE USED BY HAS FORMED PROMULGATES

10. American Academy of Actuaries’ Qualification Standards and Continuing Education Requirements As Amended and Approved by the Academy’s Board of Directors Effective January 1, 2008

11. 11 Purpose Precept 2 of the Code of Conduct requires members to perform Actuarial Services only when such member “is qualified to do so on the basis of basic and continuing education and experience and only when the Actuary satisfies applicable qualification standards” Precept 2 of the Code of Conduct requires members to perform Actuarial Services only when such member “is qualified to do so on the basis of basic and continuing education and experience and only when the Actuary satisfies applicable qualification standards” This document outlines the applicable qualification standards and continuing education requirements This document outlines the applicable qualification standards and continuing education requirements

12. 12 Scope Applies to all actuaries who are members of the Casualty Actuarial Society (CAS), Society of Actuaries (SOA), the Conference of Consulting Actuaries (CCA), and the American Society of Pension Professionals and Actuaries (ASPPA), whether or not they are also members of the American Academy of Actuaries Applies to all actuaries who are members of the Casualty Actuarial Society (CAS), Society of Actuaries (SOA), the Conference of Consulting Actuaries (CCA), and the American Society of Pension Professionals and Actuaries (ASPPA), whether or not they are also members of the American Academy of Actuaries Qualification standards apply to CAS members by virtue of the Code of Professional Conduct, which requires that actuaries observe applicable qualification standards that have been promulgated by recognized actuarial organization for the jurisdiction in which the actuary renders actuarial services Qualification standards apply to CAS members by virtue of the Code of Professional Conduct, which requires that actuaries observe applicable qualification standards that have been promulgated by recognized actuarial organization for the jurisdiction in which the actuary renders actuarial services

13. 13 Scope (continued) Applies to actuaries who issue “Statements of Actuarial Opinion” (SAO’s) Applies to actuaries who issue “Statements of Actuarial Opinion” (SAO’s)  Definition of SAO has been expanded to include virtually any actuarial work done by a practicing actuary

14. 14 Overview of AAA Qualification Standards Qualification standards are grouped into two broad categories Qualification standards are grouped into two broad categories General Qualification Standards General Qualification Standards Specific Qualification Standards Specific Qualification Standards General Qualification Standards apply to all members General Qualification Standards apply to all members Specific Qualification Standards depend on the type of SAO being issued Specific Qualification Standards depend on the type of SAO being issued

15. 15 AAA General Qualification Standards Three components Basic Education Basic Education Experience Requirement Experience Requirement Continuing Education Continuing Education

16. 16 AAA General Qualification Standard (continued) Basic Education Be a member of the Academy, a Fellow or Associate of the CAS or SOA, a Fellow of the CCA, a Member or Fellow of the ASPPA, or a fully qualified member of any IAA-member organization Be a member of the Academy, a Fellow or Associate of the CAS or SOA, a Fellow of the CCA, a Member or Fellow of the ASPPA, or a fully qualified member of any IAA-member organization Be fully knowledgeable, through examination or documented professional development of all applicable laws pertaining to the SAO being issued Be fully knowledgeable, through examination or documented professional development of all applicable laws pertaining to the SAO being issued

17. 17 AAA General Qualification Standard (continued) Experience Requirement Have three years of responsible actuarial work, which is defined as work that requires knowledge and skill in solving actuarial problems

18. 18 AAA General Qualification Standard (continued) Continuing Education 30 credit hours of relevant continuing education must be earned in the calendar year preceding the year in which an SAO is issued 30 credit hours of relevant continuing education must be earned in the calendar year preceding the year in which an SAO is issued “Credit hour” defined as 50 minutes “Credit hour” defined as 50 minutes Can be composed or either “organized activities” or other activities Can be composed or either “organized activities” or other activities At least 6 of the 30 hours must be “organized activities” At least 6 of the 30 hours must be “organized activities” At least 3 of the 30 hours must relate to professionalism topics (may or may not be “organized”) At least 3 of the 30 hours must relate to professionalism topics (may or may not be “organized”) No more than 3 hours can relate to general business courses and educational material No more than 3 hours can relate to general business courses and educational material

19. 19 AAA Continuing Education Requirements Continuing Education is “relevant” if…  It broadens or deepens an actuary’s understanding of one or more aspects of the work an actuary does  The material expands an actuary’s knowledge of practice in related disciplines  It facilitates an actuary’s entry into a new area of practice

20. 20 AAA Continuing Education Requirements “Organized” Activities Activities can be “organized” or “other” Activities can be “organized” or “other” A minimum of 6 of the required 30 credit hours must consist of “organized” activities A minimum of 6 of the required 30 credit hours must consist of “organized” activities “Organized” activities include conferences, seminars, web casts, online courses, or committee work “Organized” activities include conferences, seminars, web casts, online courses, or committee work “Organized” activities must involve actuaries or professionals working for different organizations “Organized” activities must involve actuaries or professionals working for different organizations In-house meeting or seminars do not count as “organized” unless outside speakers are used In-house meeting or seminars do not count as “organized” unless outside speakers are used

21. 21 AAA Continuing Education Requirements (continued) Other Activities Other activities include reading actuarial literature, statutes or regulations, other books, papers or articles on relevant technical or professional topics; listening to tapes of actuarial meetings or seminars; in-house meetings, studying for actuarial exams; or preparing to speak or lead a discussion at a continuing education activity

22. 22 AAA Specific Qualification Standard Applies to actuaries who issue specific types of Statements of Actuarial Opinions Applies to actuaries who issue specific types of Statements of Actuarial Opinions Currently applies to actuaries who issue SAO’s in conjunction with: Currently applies to actuaries who issue SAO’s in conjunction with:  NAIC Life and A&H Annual Statement  NAIC Property and Casualty Annual Statement  NAIC Health Annual Statement

23. 23 AAA Specific Qualification Standard (contd.) Three Components Basic Education Basic Education Experience Requirement Experience Requirement Continuing Education Continuing Education

24. 24 AAA Specific Qualification Standard (contd.) Basic Education Must meet the requirements for general qualification Must meet the requirements for general qualificationPLUS Obtain specific knowledge relating to the relevant SAO through relevant examinations given by an actuarial organization or demonstrate proof of required knowledge by obtaining a signed statement from another actuary qualified to issue the same SAO Obtain specific knowledge relating to the relevant SAO through relevant examinations given by an actuarial organization or demonstrate proof of required knowledge by obtaining a signed statement from another actuary qualified to issue the same SAO

25. 25 AAA Specific Qualification Standard (contd.) Experience Requirement Have three years of responsible actuarial work relevant to the SAO being issued. Work must have been performed under review by an actuary who was qualified to issue the same SAO at the time the review took place based on standards in effect at that time

26. 26 AAA Specific Qualification Standard (contd.) Continuing Education 15 credit hours of continuing education relevant to the specific SAO being issued must be earned in the calendar year preceding the year in which an SAO is issued 15 credit hours of continuing education relevant to the specific SAO being issued must be earned in the calendar year preceding the year in which an SAO is issued “Credit hour” defined as 50 minutes “Credit hour” defined as 50 minutes A minimum of 6 of the 15 hours must be obtained through interaction with outside actuaries or other professionals A minimum of 6 of the 15 hours must be obtained through interaction with outside actuaries or other professionals Hours that satisfy the specific qualification standard can also be applied to the general qualification standard requirements Hours that satisfy the specific qualification standard can also be applied to the general qualification standard requirements

27. 27 Types of SAO’s Standard includes a detailed list of the types of actuarial communications that would be regarding as an SAO to which the qualification standards apply Standard includes a detailed list of the types of actuarial communications that would be regarding as an SAO to which the qualification standards apply These include virtually all types of actuarial communications, including loss reserve opinions, ratemaking opinions, expert testimony, supporting actuarial reports, rate filings, etc. These include virtually all types of actuarial communications, including loss reserve opinions, ratemaking opinions, expert testimony, supporting actuarial reports, rate filings, etc.

28. 28 AAA Recordkeeping No specific recordkeeping requirements No specific recordkeeping requirements Actuaries are expected to keep their own documentation and to keep it up to date Actuaries are expected to keep their own documentation and to keep it up to date Sample recordkeeping forms provided but are not required to be used Sample recordkeeping forms provided but are not required to be used Documentation should be kept for six years Documentation should be kept for six years

29. 29 AAA “Grace” Period Typically, continuing education credit hours must be earned by December 31 of the year prior to the calendar year in which the relevant SAO is being issued Typically, continuing education credit hours must be earned by December 31 of the year prior to the calendar year in which the relevant SAO is being issued The new standard includes a “grace” period in which an actuary may earn additional credit hours to satisfy the qualification standards in the beginning of the current year as long as such credit hours are earned prior to the SAO being issued The new standard includes a “grace” period in which an actuary may earn additional credit hours to satisfy the qualification standards in the beginning of the current year as long as such credit hours are earned prior to the SAO being issued These credit hours do not carry forward to the current year requirements These credit hours do not carry forward to the current year requirements

30. 30 DOES THIS APPLY TO ME? YES, if you are a member of the AAA and issue any type of SAO subject to the standard (virtually all actuarial work) YES, if you are a member of the AAA and issue any type of SAO subject to the standard (virtually all actuarial work) ACAS’s are subject same requirements as FCAS’s ACAS’s are subject same requirements as FCAS’s Study time (exams) counts towards the “other activities” requirement Study time (exams) counts towards the “other activities” requirement

31. Casualty Actuarial Society Continuing Education (CE) Policy

32. CAS Continuing Education (CE) Policy Approved May, 2010 Effective for actuarial services rendered in 2012 Members are required to certify as one of: Compliant, Not Currently Providing Actuarial Services, or Non-Compliant Can not perform actuarial services if Non-Compliant Status to be posted on CAS website

33. CAS CE Policy CAS CE requirement is met if CAS member meets the CE requirements of national organizations such as the American Academy of Actuaries or the Canadian Institute of Actuaries Member can meet CAS CE requirements using the “Alternative Compliance Provisions” of CAS CE Policy Would not necessarily be compliant with AAA

34. CAS Continuing Education (CE) Policy Requires detailed CE log be maintained Date of activity Brief description of activity Sponsoring organization Number of credits earned “Structured” (“Organized” if AAA) or Other Subcategory for which credit applies Professionalism, job related, or business and management skills

35. CAS CE Policy Several Differences Between AAA CE requirements and the CAS Alternative Compliance Provisions including: CAS CE applies to all practicing actuaries while AAA applies only to actuaries issuing SAO CAS CE 60 units over 2 years, AAA 30 each year CAS CE average of 15 units of “structured credits” while AAA requires 6 units of “organized” activities (CAS structured not same as AAA organized)

36. Applicability Guidelines Revised December, 2009

37. 37 Applicability Guidelines It is important for practicing actuaries to be aware of the applicability of different ASOPs to the various tasks they perform The Council of Professionalism of the American Academy of Actuaries arranged for the development of these guidelines to provide nonauthoritative guidance to actuaries as to which actuarial standards might apply to them as they perform various assignments in their roles as actuaries The guidelines are meant to encourage the professionalism of actuaries but are not intended to be exhaustive Ultimately, it remains the actuary’s responsibility to identify the standard(s) that apply to each assignment, and to appropriately apply such requirements when performing that assignment

38. 38 Applicability Guidelines (continued) The guidelines are updated periodically (most recently in September 2004) The actuary is responsible to keep current with changes to the ASOPs and to ensure that professional services rendered satisfy the current version of each ASOP that is applicable to the services The Code of Professional Conduct requires that actuarial services performed by member actuaries satisfy applicable standards of practice. However, the applicability guidelines are not standards of practice, they were not promulgated by the Actuarial Standards Board, and are not binding on any actuary

39. 39 Applicability Guidelines (continued) The guidelines provide a list of the tasks normally performed by actuaries in the different practice areas, and a list of ASOPs that are usually applicable to each task List of tasks: Appraisals Expert Advice, Witness, and/or Testimony Financial Analysis, Projections, and Reporting Miscellaneous Product Development/Ratemaking/Pricing Regulatory Issues/Filings Reinsurance Reserving