Course On Course On ProfessionalismProfessionalismActuarial Organizations Actuarial Organizations

And Qualification And Qualification StandardsStandards

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Discussion TopicsDiscussion Topics

Professional Actuarial OrganizationsProfessional Actuarial Organizations Statements of Principles & Standards of Statements of Principles & Standards of

PracticePractice Pre-work ReviewPre-work Review U.S. Qualification Requirements U.S. Qualification Requirements

(including Continuing Education)(including Continuing Education) CAS Continuing Education CAS Continuing Education

RequirementsRequirements Applicability GuidelinesApplicability Guidelines

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Casualty Actuarial Casualty Actuarial SocietySociety

The Purpose of the Casualty Actuarial The Purpose of the Casualty Actuarial Society is:Society is: to advance the body of to advance the body of knowledgeknowledge of actuarial of actuarial

science applied to general insurance, including science applied to general insurance, including property, casualty and similar risk exposuresproperty, casualty and similar risk exposures

To establish and maintain To establish and maintain standards of standards of qualificationqualification for membership for membership

To promote and maintain high To promote and maintain high standards of standards of conduct and competenceconduct and competence for the members for the members

To increase the To increase the awarenessawareness of actuarial of actuarial sciencescience

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American Academy Of American Academy Of ActuariesActuaries

The Academy is a professional membership, The Academy is a professional membership, government information, and public relations government information, and public relations organization for organization for all actuaries practicing in the United all actuaries practicing in the United StatesStates, regardless of specialty, regardless of specialty

The Academy establishes The Academy establishes qualification standardsqualification standards for for making public statements of actuarial opinionmaking public statements of actuarial opinion

Professional Professional standardsstandards of practice and of practice and disciplinediscipline procedures are the responsibility of the Actuarial procedures are the responsibility of the Actuarial Standards Board (ASB) and the Actuarial Board for Standards Board (ASB) and the Actuarial Board for Counseling and Discipline (ABCD), respectively, both Counseling and Discipline (ABCD), respectively, both independent entities within the Academyindependent entities within the Academy

In Canada, the CIA serves this roleIn Canada, the CIA serves this role

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Actuarial Standards Actuarial Standards BoardBoard

The ASB’s objectives are:The ASB’s objectives are:

Direct and manageDirect and manage the development of the development of actuarial actuarial standards of practicestandards of practice by its operating by its operating committees in all areas of actuarial practicecommittees in all areas of actuarial practice

Expose and promulgateExpose and promulgate actuarial standards of actuarial standards of practicepractice within its sole discretion and pursuant to within its sole discretion and pursuant to such procedures it deems appropriate, in all areas such procedures it deems appropriate, in all areas of actuarial practiceof actuarial practice

Provide Provide continuous reviewcontinuous review of existing of existing standards standards of practiceof practice and determine whether they are in and determine whether they are in need of amendment, alteration, expansion, or need of amendment, alteration, expansion, or eliminationelimination

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Relationships Between Relationships Between Standards And Standards And

StatementsStatementsCASUALTYACTUARIAL

SOCIETY

CASUALTYACTUARIAL

SOCIETY

STATEMENTSOF

PRINCIPLES

STATEMENTSOF

PRINCIPLES

STANDARDSOF

PRACTICE

STANDARDSOF

PRACTICE

ACTUARIALSTANDARDS

BOARD

ACTUARIALSTANDARDS

BOARD

AMERICANACADEMY OFACTUARIES

AMERICANACADEMY OFACTUARIES

PROMULGATES

ARE USED BY

HAS FORMED

PROMULGATES

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Statements Of Statements Of Principle Vs. Principle Vs.

Standards Of PracticeStandards Of Practice Statement of PrincipleStatement of Principle::

A general or fundamental rule or truth on A general or fundamental rule or truth on which others are basedwhich others are based

PrinciplesPrinciples are expected to be relatively are expected to be relatively constantconstant

Standards of PracticeStandards of Practice:: Define the appropriate actuarial practicesDefine the appropriate actuarial practices StandardsStandards are expected to change over are expected to change over

time in order to remain currenttime in order to remain current

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Focus Of StandardsFocus Of Standards

Indicate how fundamental concepts & Indicate how fundamental concepts & methodological principles should be applied methodological principles should be applied in a variety of circumstancesin a variety of circumstances

Five “Areas of Practice” within ASB, each Five “Areas of Practice” within ASB, each with its own operating sub-committee, with its own operating sub-committee, charged with developing & reviewing charged with developing & reviewing appropriate Actuarial Standard of Practice appropriate Actuarial Standard of Practice (ASOP): (ASOP): CasualtyCasualty HealthHealth LifeLife PensionPension GeneralGeneral

Introduction to Introduction to ASOP’sASOP’sVideoVideo

1010

Standards Of Standards Of PracticePractice

Standards of professional performance and Standards of professional performance and behaviorbehavior

Developed to meet the expectations of users of Developed to meet the expectations of users of the professional servicesthe professional services

Provide guidance forProvide guidance for Dealing with commonly encountered problemsDealing with commonly encountered problems Handling new problems & non-routine situationsHandling new problems & non-routine situations

Ensure the high quality of professional servicesEnsure the high quality of professional services Applicable only to practice in the United StatesApplicable only to practice in the United States

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Code Of ConductCode Of Conduct Precept 1* Precept 1*

“An actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession’s responsibility to the public and to uphold the reputation of the actuarial profession.”

Violations may include: Intentionally low-balling an estimate Performing services outside of your area of expertise Failure to meet the CE requirements Not seeking peer review when necessary Criminal activities

* items marked with a “*” are also applicable to CAS candidates through the Candidate Code of Conduct

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Code Of Conduct Code Of Conduct PreceptsPrecepts

Precept 2 – requires that prior to performing actuarial services you meet the qualification standards – Experience and Continuing Ed requirements.

Precept 3 –requires that you are familiar with and appropriately apply the requirements of the ASOPs

Precept 4 -relates to appropriate communication including using terminology that is appropriate to the circumstances and the audience.

Precept 5 - Must identify the Principals (who you work for)

Precept 6 –addresses disclosure of compensation. Precept 7 Addresses disclosing a conflict of interest and expressly having parties agree that the actuary may perform the actuarial services if an actual or apparent conflict exists

Precept 8 An actuary who performs actuarial services shall take steps to ensure that such services are not used to mislead other parties.

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Code Of Conduct Code Of Conduct PreceptsPrecepts

Precept 9* - Actuary may not violate a confidentiality agreement unless required to do so by law.

Precept 10* - An actuary shall perform services with courtesy and professionalism, respect and cooperate with others in the principal’s interest.

Precept 11* - An actuary shall not engage in false advertising.

Precept 12* - Relates to using membership titles and designations.

Precept 13 – relates to a known violation of the code of conduct. You are advised to discuss the situation with the other actuary and attempt to resolve the violation. Otherwise the actuary must disclose the violation to the counseling body (ex: A.B.C.D. or C.I.A.) unless contrary to law or a confidentiality agreement (except in Canada).

Precept 14* - requires you to cooperate with and respond to the A.B.C.D. or other counseling/disciplinary body

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Statement Of Statement Of PrinciplesPrinciples

P&C Loss and Loss Adjustment Expense Reserves

P&C Insurance Ratemaking P&C Valuations Risk Classification

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Actuarial Standards Of Actuarial Standards Of PracticePractice

(Covered In e-modules Prior To (Covered In e-modules Prior To Course)Course)

Professions, Professionalism, and Intro to Professions, Professionalism, and Intro to ASOPsASOPs

ASOP 17 (Expert Testimony by Actuaries)ASOP 17 (Expert Testimony by Actuaries)

ASOP 19 (Actuarial Appraisals)ASOP 19 (Actuarial Appraisals)

ASOP 23 (Data Quality)ASOP 23 (Data Quality)

ASOP 41 (Actuarial Communication)ASOP 41 (Actuarial Communication) ASOP 43 (P/C Unpaid Claim EstimateASOP 43 (P/C Unpaid Claim Estimate))

Ratemaking ASOPs 12, 13, 25, 29, 30, 38, Ratemaking ASOPs 12, 13, 25, 29, 30, 38, and 39and 39

American Academy Of American Academy Of Actuaries’Actuaries’

Qualification Qualification Standards And Standards And

Continuing Education Continuing Education RequirementsRequirements

As Amended And Approved By The As Amended And Approved By The Academy’s Board Of DirectorsAcademy’s Board Of Directors

Effective January 1, 2008Effective January 1, 2008

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PurposePurpose

Precept 2 of the Code of Conduct Precept 2 of the Code of Conduct requires members to perform requires members to perform Actuarial Actuarial ServicesServices only when such member only when such member ““is is qualified to do so on the basis of basic qualified to do so on the basis of basic and continuing education and experience and continuing education and experience and only when the Actuary satisfies and only when the Actuary satisfies applicable qualification standards”applicable qualification standards”

This document outlines the applicable This document outlines the applicable qualification standards and continuing qualification standards and continuing education requirementseducation requirements

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ScopeScope

Applies to all actuaries who are members of the Applies to all actuaries who are members of the Casualty Actuarial Society (CAS), Society of Casualty Actuarial Society (CAS), Society of Actuaries (SOA), the Conference of Consulting Actuaries (SOA), the Conference of Consulting Actuaries (CCA), and the American Society of Actuaries (CCA), and the American Society of Pension Professionals and Actuaries (ASPPA), Pension Professionals and Actuaries (ASPPA), or or whether or not they are also members of whether or not they are also members of the American Academy of Actuaries, the American Academy of Actuaries, as well as well as other Academy membersas other Academy members

Qualification standards apply to CAS members Qualification standards apply to CAS members by virtue of the Code of Professional Conduct, by virtue of the Code of Professional Conduct, which requires that actuaries observe which requires that actuaries observe applicable qualification standards that have applicable qualification standards that have been promulgated by recognized actuarial been promulgated by recognized actuarial organization for the jurisdiction in which the organization for the jurisdiction in which the actuary renders actuarial servicesactuary renders actuarial services

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ScopeScope (Continued)(Continued)

Applies to actuaries who issue Applies to actuaries who issue “Statements of Actuarial Opinion” (SAO’s)“Statements of Actuarial Opinion” (SAO’s)

Definition of SAO has been expanded to Definition of SAO has been expanded to include virtually any actuarial work done include virtually any actuarial work done by a practicing actuaryby a practicing actuary

This applies to you if you work in the U.S.!This applies to you if you work in the U.S.!

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Overview Of U.S.Overview Of U.S. Qualification Qualification

StandardsStandards Qualification standards are grouped Qualification standards are grouped

into two broad categoriesinto two broad categories General Qualification StandardsGeneral Qualification Standards Specific Qualification StandardsSpecific Qualification Standards

General Qualification Standards apply General Qualification Standards apply to all membersto all members

Specific Qualification Standards Specific Qualification Standards depend on the type of SAO being depend on the type of SAO being issuedissued

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U.S. General U.S. General Qualification Qualification

StandardsStandards

Three componentsThree components

Basic EducationBasic Education

Experience RequirementExperience Requirement

Continuing EducationContinuing Education

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U.S. GeneralU.S. General Qualification Qualification StandardStandard (Continued)(Continued)

Basic EducationBasic Education

Be a member of the Academy, a Fellow or Be a member of the Academy, a Fellow or Associate of the CAS or SOA, a Fellow of the Associate of the CAS or SOA, a Fellow of the CCA, a Member or Fellow of the ASPPA, or a CCA, a Member or Fellow of the ASPPA, or a fully qualified member of any IAA-member fully qualified member of any IAA-member organizationorganization

Be fully knowledgeable, through examination or Be fully knowledgeable, through examination or documented professional development of all documented professional development of all applicable laws pertaining to the SAO being applicable laws pertaining to the SAO being issuedissued

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U.S. GeneralU.S. General Qualification Qualification StandardStandard (Continued)(Continued)

Experience RequirementExperience Requirement

Have three years of responsible Have three years of responsible actuarial work, which is defined as actuarial work, which is defined as work that requires knowledge and work that requires knowledge and skill in solving actuarial problemsskill in solving actuarial problems

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U.S. GeneralU.S. General Qualification Qualification StandardStandard (Continued)(Continued)

Continuing EducationContinuing Education 30 credit hours of relevant continuing education must be 30 credit hours of relevant continuing education must be

earned in the calendar year preceding the year in which earned in the calendar year preceding the year in which an SAO is issuedan SAO is issued

““Credit hour” defined as 50 minutesCredit hour” defined as 50 minutes Can be composed or either “organized activities” or Can be composed or either “organized activities” or

other activitiesother 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 At least 3 of the 30 hours must relate to professionalism

topics (may or may not be “organized”)topics (may or may not be “organized”) No more than 3 hours can relate to general business No more than 3 hours can relate to general business

courses and educational material courses and educational material

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U.S. Continuing U.S. Continuing Education Education

RequirementsRequirementsContinuing Education is “relevant” if…Continuing Education is “relevant” if…

It broadens or deepens an actuary’s It broadens or deepens an actuary’s understanding of one or more aspects of understanding of one or more aspects of the work an actuary doesthe work an actuary does

The material expands an actuary’s The material expands an actuary’s knowledge of practice in related knowledge of practice in related disciplinesdisciplines

It facilitates an actuary’s entry into a It facilitates an actuary’s entry into a new area of practicenew area of practice

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U.S. Continuing U.S. Continuing Education Education

RequirementsRequirements““Organized” ActivitiesOrganized” Activities

Activities can be “organized” or “other”Activities can be “organized” or “other” A minimum of 6 of the required 30 credit hours must A minimum of 6 of the required 30 credit hours must

consist of “organized” activitiesconsist of “organized” activities ““Organized” activities include conferences, seminars, Organized” activities include conferences, seminars,

web casts, online courses, or committee workweb casts, online courses, or committee work ““Organized” activities must involve interaction with Organized” activities must involve interaction with

actuaries or professionals working for different actuaries or professionals working for different organizationsorganizations

In-house meeting or seminars do not count as In-house meeting or seminars do not count as “organized” unless outside speakers are used“organized” unless outside speakers are used

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U.S. Continuing U.S. Continuing Education RequirementsEducation Requirements

(Continued)(Continued)Other ActivitiesOther Activities

Other activities include reading actuarial Other activities include reading actuarial literature, statutes or regulations, other literature, statutes or regulations, other books, papers or articles on relevant books, papers or articles on relevant technical or professional topics; listening technical or professional topics; listening to tapes of actuarial meetings or to tapes of actuarial meetings or seminars; in-house meetings, studying seminars; in-house meetings, studying for actuarial exams; or preparing to for actuarial exams; or preparing to speak or lead a discussion at a speak or lead a discussion at a continuing education activitycontinuing education activity

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U.S. Specific U.S. Specific Qualification StandardQualification Standard

Applies to actuaries who issue specific Applies to actuaries who issue specific types of Statements of Actuarial types of Statements of Actuarial OpinionsOpinions

Currently applies to actuaries who Currently applies to actuaries who issue SAO’s in conjunction with:issue SAO’s in conjunction with:

NAIC Life and A&H Annual StatementNAIC Life and A&H Annual Statement NAIC Property and Casualty Annual NAIC Property and Casualty Annual

StatementStatement NAIC Health Annual StatementNAIC Health Annual Statement

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U.S. Specific U.S. Specific Qualification Standard Qualification Standard

(Contd.)(Contd.)Three ComponentsThree Components

Basic EducationBasic Education

Experience RequirementExperience Requirement

Continuing EducationContinuing Education

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U.S. Specific U.S. Specific Qualification Standard Qualification Standard

(Contd.)(Contd.)Basic EducationBasic Education

Must meet the requirements for general Must meet the requirements for general qualification qualification

PLUSPLUS

Obtain specific knowledge relating to the Obtain specific knowledge relating to the relevant SAO through relevant examinations relevant SAO through relevant examinations given by an actuarial organization or given by an actuarial organization or demonstrate proof of required knowledge by demonstrate proof of required knowledge by obtaining a signed statement from another obtaining a signed statement from another actuary qualified to issue the same SAOactuary qualified to issue the same SAO

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U.S. Specific U.S. Specific Qualification Standard Qualification Standard

(Contd.)(Contd.)Experience RequirementExperience Requirement

Have three years of responsible actuarial Have three years of responsible actuarial work relevant to the SAO being issued. work relevant to the SAO being issued. Work must have been performed under Work must have been performed under review by an actuary who was qualified to review by an actuary who was qualified to issue the same SAO at the time the review issue the same SAO at the time the review took place based on standards in effect at took place based on standards in effect at that timethat time

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U.S. Specific U.S. Specific Qualification Standard Qualification Standard

(Contd.)(Contd.)Continuing EducationContinuing Education

15 credit hours of continuing education relevant to the 15 credit hours of continuing education relevant to the specific SAO being issued must be earned in the calendar specific SAO being issued must be earned in the calendar year preceding the year in which an SAO is issuedyear preceding the year in which an SAO is issued

““Credit hour” defined as 50 minutesCredit hour” defined as 50 minutes

A minimum of 6 of the 15 hours must be obtained through A minimum of 6 of the 15 hours must be obtained through interaction with outside actuaries or other professionalsinteraction with outside actuaries or other professionals

Hours that satisfy the specific qualification standard can Hours that satisfy the specific qualification standard can also be applied to the general qualification standard also be applied to the general qualification standard requirementsrequirements

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Types Of SAO’sTypes Of SAO’s

Standard includes a detailed list of the Standard includes a detailed list of the types of actuarial communications that types of actuarial communications that would be regarding as an SAO to which would be regarding as an SAO to which the qualification standards applythe qualification standards apply

These include virtually all types of These include virtually all types of actuarial communications, including loss actuarial communications, including loss reserve opinions, ratemaking opinions, reserve opinions, ratemaking opinions, expert testimony, supporting actuarial expert testimony, supporting actuarial reports, rate filings, etc.reports, rate filings, etc.

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U.S. RecordkeepingU.S. Recordkeeping

No specific method of recordkeeping No specific method of recordkeeping requiredrequired

Actuaries are expected to keep their own Actuaries are expected to keep their own documentation and to keep it up to datedocumentation and to keep it up to date

Sample recordkeeping forms provided but Sample recordkeeping forms provided but are not required to be usedare not required to be used

Documentation should be kept for six yearsDocumentation should be kept for six years

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““Grace” PeriodGrace” Period

Typically, continuing education credit hours Typically, continuing education credit hours must be earned by December 31 of the year must be earned by December 31 of the year prior to the calendar year in which the prior to the calendar year in which the relevant SAO is being issuedrelevant SAO is being issued

The new standard includes a “grace” period The new standard includes a “grace” period in which an actuary may earn additional in which an actuary may earn additional credit hours to satisfy the qualification credit hours to satisfy the qualification standards in the beginning of the current standards in the beginning of the current year as long as such credit hours are earned year as long as such credit hours are earned prior to the SAO being issuedprior to the SAO being issued These credit hours do not carry forward to the These credit hours do not carry forward to the

current year requirementscurrent year requirements

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Does This Apply To Me?Does This Apply To Me?

New ACAS’s are subject to the same New ACAS’s are subject to the same requirements as FCAS’s. requirements as FCAS’s.

Once an actuary becomes a member of Once an actuary becomes a member of the CAS, he or she must meet the basic the CAS, he or she must meet the basic education and experience requirements education and experience requirements before issuing a statement of actuarial before issuing a statement of actuarial opinion. opinion.

Hour requirements must be met IN FULL Hour requirements must be met IN FULL for newly credentialed actuaries. There for newly credentialed actuaries. There is no proration of hours depending on the is no proration of hours depending on the calendar year.calendar year.

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What About Study Time What About Study Time And This Course?And This Course?

Study time (exams) may count towards the “other Study time (exams) may count towards the “other activities” requirement. Any excess study hours activities” requirement. Any excess study hours can be rolled for “other activities” hours in the can be rolled for “other activities” hours in the following year.following year.

However study time alone won’t guarantee However study time alone won’t guarantee compliance. Actuaries must have six hours from compliance. Actuaries must have six hours from “organized activities” and three continuing “organized activities” and three continuing education hours on professionalism topics. education hours on professionalism topics.

This seminar counts towards both organized This seminar counts towards both organized activities and the hours dedicated to professionalism activities and the hours dedicated to professionalism topics, provided that you attain your ACAS this year topics, provided that you attain your ACAS this year or next.or next.

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Casualty Actuarial Casualty Actuarial Society Continuing Society Continuing

Education (CE) PolicyEducation (CE) Policy

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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

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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

Academy of Actuaries

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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 Academy) or

Other Subcategory for which credit applies

Professionalism, job related , or business and management skills

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CAS CE Policy

Several Differences Between U.S. CE requirements and the CAS Alternative Compliance Provisions including: CAS CE applies to all practicing actuaries while

Academy applies only to actuaries issuing SAO CAS CE 60 units over 2 years, Academy 30

each year CAS CE average of 15 units of “structured

credits” while Academy requires 6 units of “organized” activities (CAS structured not same as Academy organized)

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Applicability Applicability GuidelinesGuidelines

Revised December, 2009Revised December, 2009

44

Applicability Applicability GuidelinesGuidelines

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

45

Applicability Applicability GuidelinesGuidelines (Continued)(Continued)

The guidelines are updated periodically (most recently in December 2009)

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

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Applicability Applicability GuidelinesGuidelines (Continued)(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

47

Applicability Applicability GuidelinesGuidelines

(Example)(Example)

ReservingCompletion of Reserve-related Schedules of the AnnualStatement (e.g., Schedule P)

Prepare Projections of Reserve Development That CanBe Monitored over the Subsequent Calendar Period

Provide Statement of Actuarial Opinion Relating toReserves

Test Adequacy of Previous Loss and Expense Reserves

9*, 20, 21, 23, 38, 41, 43

9*, 20, 23, 25, 38, 41, 43

9*, 13, 20, 21, 23, 36, 38, 41, 43

9*, 20, 23, 38, 41, 43