1. Course on Professionalism Actuarial Organizations and Qualification Standards

2. 2 Discussion Topics Professional Actuarial OrganizationsProfessional Actuarial Organizations Statements of Principles & Standards of PracticeStatements of Principles & Standards of Practice Qualification Requirements (including Continuing Education)Qualification Requirements (including Continuing Education) Applicability GuidelinesApplicability 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 establish and maintain standards of qualification for membership – To promote and maintain high standards of conduct and competence for the members – 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 specialtyThe 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 opinionThe 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 AcademyProfessional 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

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 –Principles are expected to be relatively constant Standard of Practice :Standard of Practice : –Define the generally accepted actuarial practices –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 circumstancesIndicate 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 –Health –Life –Pension –General

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

8. 8 Actuarial Standards Board The ASB’s objectives are: 4Direct and manage the development of actuarial standards of practice by its operating committees in all areas of actuarial practice 4Expose and promulgate actuarial standards of practice within its sole discretion and pursuant to such procedures it deems appropriate, in all areas of actuarial practice 4Provide 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. 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 requirementsThis 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 ActuariesApplies 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 servicesQualification 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 Qualification Standards Qualification standards are grouped into two broad categoriesQualification standards are grouped into two broad categories –General Qualification Standards –Specific Qualification Standards General Qualification Standards apply to all membersGeneral Qualification Standards apply to all members Specific Qualification Standards depend on the type of SAO being issuedSpecific Qualification Standards depend on the type of SAO being issued

15. 15 General Qualification Standards Three components Basic EducationBasic Education Experience RequirementExperience Requirement Continuing EducationContinuing Education

16. 16 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 organizationBe 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 issuedBe fully knowledgeable, through examination or documented professional development of all applicable laws pertaining to the SAO being issued

17. 17 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 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 issued30 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 activitiesCan 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 materialNo more than 3 hours can relate to general business courses and educational material

19. 19 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 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” activitiesA 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 usedIn-house meeting or seminars do not count as “organized” unless outside speakers are used

21. 21 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 Specific Qualification Standard Applies to actuaries who issue specific types of Statements of Actuarial OpinionsApplies 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 Specific Qualification Standard (contd.) Three Components Basic EducationBasic Education Experience RequirementExperience Requirement Continuing EducationContinuing Education

24. 24 Specific Qualification Standard (contd.) Basic Education Must meet the requirements for general qualificationMust 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 SAOObtain 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 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 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 issued15 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 professionalsA 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 requirementsHours 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 applyStandard 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 Recordkeeping No specific recordkeeping requirementsNo specific recordkeeping requirements Actuaries are expected to keep their own documentation and to keep it up to dateActuaries are expected to keep their own documentation and to keep it up to date Sample recordkeeping forms provided but are not required to be usedSample recordkeeping forms provided but are not required to be used Documentation should be kept for six yearsDocumentation should be kept for six years

29. 29 “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 issuedTypically, 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 issuedThe 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

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

31. 31 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

32. 32 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

33. 33 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