Course On
Professionalism
Actuarial Organizations And
Qualification Standards
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Discussion Topics
Professional Actuarial Organizations
CAS Continuing Education Requirements
Statements of Principles & Standards of
Practice
Pre-work Review
U.S. Qualification Requirements (including
Continuing Education) Applicability
Guidelines
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Casualty Actuarial Society
The Purpose of the Casualty Actuarial
Society is:
– to advance the body of knowledge of
actuarial science applied to general
insurance, including property, casualty and
similar risk exposures
– 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
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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 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
• In Canada, the CIA serves this role
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Actuarial Standards Board
The ASB’s objectives are:
• Direct and manage the development of actuarial
standards of practice by its operating committees in all
areas of actuarial practice
• 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
• Provide continuous review of existing standards of
practice and determine whether they are in need of
amendment, alteration, expansion, or elimination
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Standards Of Practice
Standards of professional performance and appropriate
practice
Developed to identify what the actuary should consider,
document and disclose when performing an actuarial
assignment
Provide guidance for
– Dealing with commonly encountered situations
– Provide flexibility for dealing with atypical situations
Are Principles based and do not attempt to dictate every
step and decision in the actuarial assignment
Applicable only to practice in the United States
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Focus Of Standards
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
Standards of Practice (ASOPs):
–
–
–
–
–
Casualty
Health
Life
Pension
General
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Casualty Actuarial
Society Continuing
Education (CE) Policy
As Amended And Approved By the
Casualty Actuarial Society Board of Directors
Applies to Actuarial Services rendered
on or after January 1, 2016
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Why the CAS CE Policy?
This Policy specifies 3 things:
1.How to meet CAS CE requirements
2.Continuing Education
documentation/log requirement
3.Attestation requirement
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CAS CE Policy:
CAS CE requirements
Meet requirements by:
– Satisfying the continuing education
requirements established by a national
actuarial organization recognized by the Policy;
(practice in U.S. :the AAA);
– The Alternative Compliance Provisions was
a CAS specific set of CE requirements. This
component has been eliminated effective
1/1/2015.
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CAS CE Policy:
Documentation/Log Requirement
Members must maintain a log of their continuing
education activity to document that they have
met the continuing education requirements
The CAS may audit a small percentage of
members annually; Members who are audited
must provide an attested copy of their log
The CAS may be required by court order to
provide information to third parties
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CAS CE Policy: Attestation
Members must certify compliance with this
policy at the end of each calendar year
New members need not certify compliance until
the end of the calendar year following their
admission to the CAS
Online member directory will display compliance
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Introduction to ASOPs
Video
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Statements Of Principles Vs.
Standards Of Practice
Statements of Principles:
– A general or fundamental rule or truth on
which others are based
– Principles are expected to be relatively
constant
Standards of Practice:
– Define the appropriate actuarial practices
– Standards are expected to change over time
in order to remain current
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Relationships Between Standards
And Statements
AMERICAN
ACADEMY OF
ACTUARIES
CASUALTY
ACTUARIAL
SOCIETY
HAS FORMED
PROMULGATES
STATEMENTS
OF
PRINCIPLES
ARE USED BY
ACTUARIAL
STANDARDS
BOARD
PROMULGATES
STANDARDS
OF
PRACTICE
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Statements Of Principles specific
to Property Casualty Insurance
P&C Loss and Loss Adjustment
Expense Unpaid Claim Estimates
P&C Insurance Ratemaking
P&C Valuations
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Actuarial Standards Of Practice
(Covered In e-modules Prior To Course)
ASOP 1 (Introductory Standard of Practice)
ASOP 17 (Expert Testimony by Actuaries)
ASOP 19 (Actuarial Appraisals)
ASOP 23 (Data Quality)
ASOP 41 (Actuarial Communication)
ASOP 43 (P/C Unpaid Claim Estimate)
Ratemaking ASOPs 12, 13, 25, 29, 30, 38,
and 39
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Code Of Conduct
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 Precepts
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 Precepts
•
•
•
•
•
•
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: ABCD. or CIA) 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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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
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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”
This document outlines the applicable
qualification standards and continuing
education requirements
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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), or whether or not they are also
members of the American Academy of Actuaries, as
well as other Academy members
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
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Scope (Continued)
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
This applies to you if you work in the U.S.!
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Overview Of U.S.
Qualification Standards
Qualification standards are grouped into
two broad categories
– General Qualification Standards
– Specific Qualification Standards
General Qualification Standards apply to
all members
Specific Qualification Standards depend
on the type of SAO being issued
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U.S. General Qualification
Standards
Three components
Basic Education
Experience Requirement
Continuing Education
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U.S. 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 fully knowledgeable, through examination or
documented professional development of all
applicable laws pertaining to the SAO being
issued
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U.S. 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
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U.S. 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
“Credit hour” defined as 50 minutes
Can be composed of either “organized activities” or other
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”)
No more than 3 hours can relate to general business
courses and educational material
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U.S. 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
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U.S. Continuing Education
Requirements
“Organized” Activities
Activities can be “organized” or “other”
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 must involve interaction with
actuaries or professionals working for different
organizations
In-house meeting or seminars do not count as
“organized” unless outside speakers are used
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U.S. 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
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U.S. Specific Qualification
Standard
Applies to actuaries who issue specific
types of Statements of Actuarial Opinions
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
33
U.S. Specific Qualification
Standard (Contd.)
Three Components
Basic Education
Experience Requirement
Continuing Education
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U.S. Specific Qualification
Standard (Contd.)
Basic Education
Must meet the requirements for general
qualification
PLUS
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
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U.S. 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
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U.S. 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
“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
Hours that satisfy the specific qualification standard can also
be applied to the general qualification standard requirements
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Types Of SAOs
Standard includes a detailed list of the types of
actuarial communications that would be
regarded 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.
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U.S. Recordkeeping
No specific method of recordkeeping required
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
Documentation should be kept for six years
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“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
The 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
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Does This Apply To Me?
New ACAS’s are subject to the same
requirements as FCAS’s.
Once an actuary becomes a member of the
CAS, he or she must meet the basic
education and experience requirements
before issuing a statement of actuarial
opinion.
Hour requirements must be met IN FULL for
newly credentialed actuaries. There is no
proration of hours depending on the calendar
year.
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What About Study Time And
This Course?
Study time (exams) may count towards the “other
activities” requirement. Any excess study hours
can be rolled for “other activities” hours in the
following year.
However study time alone won’t guarantee
compliance. Actuaries must have six hours from
“organized activities” and three continuing
education hours on professionalism topics.
This seminar may count towards both organized
activities and the hours dedicated to
professionalism topics, provided that you attain
your ACAS this year or next.
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Applicability Guidelines
Revised March, 2015
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Applicability Guidelines
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
For practicing actuaries however, the applicability guidelines
are a good resource of identifying the different ASOPs for
the various tasks they perform
The guidelines are published by the Council on
Professionalism of the American Academy of Actuaries, not
the ASB
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Applicability Guidelines
(Continued)
The guidelines are meant to encourage the professionalism of
actuaries, but are not intended to be exhaustive
The guidelines are updated periodically (most recently in March
2015)
The Code of Professional Conduct requires that actuarial services
performed by member actuaries satisfy all applicable standards of
practice. The AGs are a resource for use, not a substitute for the
requirement.
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
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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 related to Casualty:
–
–
–
–
–
–
–
Appraisals
Data Management
Enterprise Risk Management
Expert Advice, Witness, and/or Testimony
Financial Analysis, Projections, and Reporting
Product Development/Ratemaking/Pricing
Reserving
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Applicability Guidelines
Product Development/Ratemaking/Pricing
(Excerpt)
6.1 Creation and review of a risk
classification plan
1*,12, 13, 23*, 25, 38, 39, 41*
6.2 Evaluation of deductibles, coinsurance,
and Insurance to Value
1*,12, 13, 23*, 25, 29, 38, 41*
6.4 Individual Risk Rating
1*,7, 12, 13, 23*, 25, 29, 30,
38, 39, 41*
6.8 Pricing for new coverage and programs
1*,7, 12, 13, 20, 23*, 25, 29,
30, 38, 39, 41*
* ASOP’s 1, 23, and 41 apply to all actuarial work.
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