Professionalism
Allan Kaufman
Casualty Actuaries in Europe
November 29,2007
Imagine this

Once upon a time….
A US trained FCAS, based in the UK, an FIA by
mutual recognition, doing actuarial work for a
German insurer which is part of a Swiss-based
group.
What professionalism rules apply
2
Issues to Consider


CAS Code of Professional Conduct
American Academy of Actuaries
Qualification Standard
 Actuarial Standards of Practice


Institute of Actuaries
Code of Conduct
 GN 12


German and Swiss rules
3
CAS Code of Professional
Conduct
Precept 2 – An Actuary shall perform Actuarial
services only when the Actuary is qualified to do
so on the basis of basic and continuing
education and experience and only when the
Actuary satisfies applicable qualification
standards.
4
CAS Code of Professional
Conduct
ANNOTATION 2-1. It is the professional
responsibility of an Actuary to observe applicable
qualification standards that have been promulgated by a
Recognized Actuarial Organization for the jurisdictions
in which the Actuary renders Actuarial Services and to
keep current regarding changes in these standards.

In the US, the AAA has been delegated that
responsibility by the other US-based organizations
(CAS, SoA, ASPPA, CCA)
New standard effective 1/1/08
5
Who’s Affected?


Actuaries who issue Statements of Actuarial Opinion when
rendering Actuarial Services in the United States are required by
the Code of Professional Conduct to satisfy the Qualification
Standards.
The Academy makes a broad interpretation of rendering
Actuarial Services in the United States

Depends on the status of the entity for which the work is being done,
rather than on where the actuary happens to be located.
6
Statement of Actuarial
Opinion
For purposes of these Qualification Standards, a
Statement of Actuarial Opinion (SAO) is an opinion
expressed by an actuary in the course of performing
Actuarial Services and intended by that actuary to be
relied upon by the person or organization to which the
opinion is addressed.
7
Statement of Actuarial
Opinion
Actuarial Services are defined in the Code of Professional
Conduct as “Professional services provided to a Principal
[client or employer] by an individual acting in the
capacity of an actuary. Such services include the
rendering of advice, recommendations, findings, or
opinions based upon actuarial considerations.”
8
Statement of Actuarial
Opinion
 If the Principal is not subsequently sent a final

report within a reasonable time frame, that is an
indication that the draft report is an SAO. The
actuary should communicate to the Principal that
the final report replaces the draft report.
There may be instances where the actuary sends
the Principal a draft report that clearly indicates it
should not be relied upon (a document that is not
an SAO according to the above definition) and the
actuary and Principal subsequently agree that a
final report will not be issued. In this case, the
draft report is not an SAO.
9
Current Standard

Current standard applies only to prescribed statements of
actuarial opinion




A statement of actuarial opinion issued for purpose of
compliance with law or regulation;
A statement of actuarial opinion issued for purpose of
compliance with ASOPs as promulgated by the ASB; or
An actuarial communication issued for purpose of
compliance with standards promulgated by the FASB, GASB,
CASB, AICPA or FASAB.
Both standards (current & new) maintain additional
requirements for NAIC reserve opinions
10
Expanded Scope of New
Standard


Because the new standard applies to all
statements of actuarial opinion, it’s scope covers
virtually all actuaries practicing in the United
States
Does this mean you? Do you ever provide
actuarial services that are intended to be relied
upon by a person in the US?
11
Continuing Education

30 hours per year (24 in 2008 for 2009)
6 hours must be “organized”
 3 hours “professionalism”
 1 “hour” = 50 minutes



This session is 0.5 units of professionalism provided we
spend 25 minutes on it
Excess carry forward is permitted, but only into the
following year
12
Continuing Education

Relevant to the subject of the SAO
Under a very broad definition of relevant
 Up to the actuary to determine
 Not necessarily purely actuarial in nature
 Professionalism encouraged
 General business courses probably don’t have
enough technical content – limit to 3 hours

13
Continuing Education:
Organized Activities


“Organized activities” involve interaction
with actuaries or other professionals working
for different organizations.
Examples of organized activities include, but
are not limited to, conferences, seminars,
webcasts, in-person or online courses, or
committee work that is directly relevant to
the area of practice of the subject of the
Statement of Actuarial Opinion.
14
Continuing Education:
Organized Activities


In-house meetings can constitute “organized
activities” by using outside speakers who are actively
involved in the meeting, otherwise in-house
meetings without an outside speaker could qualify as
an “other activity” for CE credit purposes.
“Outside speaker” does not include someone
employed by a company working at a different
location.
15
Details



Transition for 2008
Carryback/Carryforward generally
NAIC specifics rules
16
Institute of Actuaries

Old Scheme


Only compulsory for statutory actuaries
New Scheme (July 06)
All actuaries (UK and non-UK based)
 Flexible – design your own program
 Record keeping on website
 3 categories of skill
 CPD handbook

17
Institute of Actuaries
Cateogries of actuary




Category 1 – requiring practicing certificates
Category 2 – working in areas covered by
sepcialist syllabus
Category 3- not 1 or 2
Category 4 – not working
18
Institute of Actuaries
Category 1





15 hours verifiable CPD
10 hours relevant to practicing certificate
5 hours external to employer
2 hours on professional skills – professinal
ethics, non-actuarial skills
Professionalism event every 10 years
19
Institute of Actuaries
Category 2

Same as category 1 except:

“Personally assessed activities can replace
“verifiable” activities
Some activities to be external to employer

20
Current CAS Issues
and Directions
Allan Kaufman
Casualty Actuaries in Europe
November 29, 2007
Agenda

CAS Centennial Goal

CAS Education Strategy and Initiatives

New Variance Journal

ERM Initiatives

Your Input
22
CAS Centennial Goal

March 2003


November 2006


CAS Board adopted the Centennial Goal.
LRPC presented its annual report to the Board;
Board agreed to revisit the goal.
March 2007

Board reaffirmed the long-term vision for CAS;
approved refreshed wording for the Goal.
23
CAS Centennial Goal
The CAS will be recognized globally as a leading
resource in educating casualty actuaries and
conducting research in casualty actuarial science.
CAS members will advance their expertise in
pricing, reserving, and capital modeling; and
leverage their skills in risk analysis to become
recognized as experts in the evaluation of
enterprise risks, particularly for the property and
casualty insurance industry.
24
Update on
Education Strategy
White Paper on CAS Education Strategy
 Released in November 2006 and feedback invited
via online survey through January 2007.
 Proposed:



Optional tracks for Fellowship
Enhanced continuing education program
Non-exam evaluation methods
25
Update on
Education Strategy
Summary of Feedback:
 Fellowship tracks did not garner broad support
– concern with impeding career mobility.
 Providing more rigorous continuing education
offerings was strongly supported.
 Required workshops for basic education –
some support for testing knowledge and skills.
 Desire for improved study materials.
26
Update on
Education Strategy


Board has discussed feedback and ideas during
March, June, September 2007 meetings.
Conclusions to date:





Changes will be made to basic education
Minimizing transition issues is a priority
Will not pursue Fellowship tracks
Supports idea of Capstone Seminar
Considering Internet-based course for topics
requiring only familiarity
27
Update on
Education Strategy




No implementation timeline has been
contemplated at this point.
We will not have details on implementation until
we first decide on the specific strategy.
Implementation will not occur for several years.
Implementation plan will include a transition
strategy designed to minimize disruption for
candidates.
28
Other Education Issues Improved Educational Materials



Board established the Task Force on Developing
Education Materials.
Task Force issued two Requests For Proposals for
authors to create educational publications on
(1) ratemaking and (2) reserving.
Board awarded contracts following the June 2007
meeting.
Ratemaking – EMB America
 Reserving – KPMG

29
Other Education Issues Candidate Code of Conduct



Board approved adoption of a Code of
Professional Ethics for Candidates, and Rules of
Procedure for Disciplinary Actions Involving
Candidates
Purpose: to require Actuarial Candidates to adhere
to the high standards of conduct, practice, and
qualifications of the actuarial profession.
Effective: with registration for the 2008 Spring
exam sitting.
30
New CAS Journal
www.VarianceJournal.org
31
ERM Initiatives




ERM Vision
2008 ERM Symposium
Online Course: Introduction to ERM
2007 CAS Spring Meeting – ERM track
(six sessions)
32
ERM for CAS Committee



Prioritized actuarial credibility as the most
important strategic risk for the CAS.
Developed Crisis Communication Plan.
Addressed catastrophe risk as it pertains to:
CAS Office (Disaster Recovery Plan)
 CAS Web Site

33
CERA
Chartered Enterprise Risk Analyst

What is CERA?


New Associate-level credential offered by the SOA.
CAS position:

In 2005, the CAS Board resolved that at this time,
the Board discourages consideration of an
independent ERM credential sponsored by the
actuarial profession.
34
CERA
Chartered Enterprise Risk Analyst

CAS position:

The CAS, in conjunction with the Risk Management
Section, should focus on enhancing the role of actuaries
in ERM by:
 Providing continuing education on ERM;
 Conducting research to address unanswered ERM
questions (e.g., operational risks, risk aggregation)
 Promoting actuarial skills in addressing ERM issues;
and
 Exploring possible changes to the CAS basic
35
education syllabus.
2007 Calendar of Events





NEW - Reserve Variability Webinar
September 27, 2007
Predictive Modeling Seminar
October 11-12, 2007, Las Vegas
Annual Meeting
November 11-14, 2007, Chicago
Seminar on Ratemaking
March 17-18, 2008, Boston
ERM Symposium
April 14-16, 2008, Chicago
36
I welcome your input
regarding . . .

CAS Centennial Goal

CAS Education Strategy and Initiatives

New AAA Qualification Standards

CAS Publications

ERM Initiatives

Other Topics

Questions?
37
Thank You!
Allan Kaufnan
Casualty Actuaries of Europe
November 29, 2007