Transcript CAS Update. Where we`ve been, where we are, and where we`re

31st Annual GIRO Convention
12-15 October 2004
Hotel Europe
Killarney, Ireland
CAS Update
Where We’ve Been, Where We Are, and Where We’re Going
October 14, 2004
Agenda
 Two Important Task Forces
 Task Force on ACAS Vote
 Task Force on Classes of Membership
 Education Initiatives
 Research Working Parties
 Your Input – even if you are not a CAS
member
Two Important
Task Forces
 Task Force on the ACAS Vote
 Should Associates have voting rights?
 All ACAS? After N Years as an ACAS?
 Stand for election to the Board?
 Hold officer positions, e.g., Vice President?
 Serve on and chair committees? Which ones?
 Task Force on Classes of Membership
 How many classes should the CAS have?
 How should these classes be defined?
Historical Perspective
of Associates
 Since 1914, two classes of membership.
 Associate/Fellow designations have changed
over the years:
 Initially, based on company responsibilities.
 Beginning in 1915, based on exams:
 Number and content of exams has varied.
 Currently a two exam educational difference.
 Currently little distinction between FCAS and
ACAS in the ability to perform professional
actuarial services in the US.
Task Force on ACAS Vote
Why are we considering this issue?
 Voting rights have not changed since inception and
represent a time when there was a much clearer
distinction between Fellows and Associates.
 A significant minority (25-30%) of Associates have
stopped taking exams. We need to recognize the
career Associates.
 Lack of true representation for Associates, despite
the fact that they pay full dues.
 Approval of Mutual Recognition.
Task Force on ACAS Vote
 Right to vote should be given to members upon
attainment of Fellowship or five years after they are
recognized as Associates, whichever comes first. Right to
vote should be unrestricted.
 All voting members should be allowed to stand for election
to the Board of Directors.
 Voting Associates may hold all officer positions, with the
exception of:
 President / President Elect
 Vice President - Admissions
 Committee membership is to remain restricted to Fellows
for Discipline, Education Policy, Syllabus.
Task Force on
Classes of Membership
Why are we considering this issue?
 Current structure reflects a time when there was a much clearer
distinction between FCAS and ACAS.
 Educational differences do not restrict an ACAS from completing
assignments like those done by a FCAS in the US.
 Associate designation connotes lesser standing, even though the ACAS
is fully qualified to sign statements of actuarial opinion.
 Two designations that each mean a fully qualified actuary is
confusing.
 ACAS not considered qualified outside the US
 ACAS does not meet IAA “fully qualified actuary” criteria
 Not enough finance – even though far above in other areas
 This is an issue for the AAA (single membership class)
Task Force on
Classes of Membership
The Task Force recommended (May):





Only one class of membership - Fellow.
Certificate of Achievement in Casualty Actuarial Science.
All candidates under the Code of Professional Conduct.
ACAS continue to be awarded for a limited time.
Existing ACAS’s awarded FCAS after completing exams or
after five additional years have passed
 task force was split
 Ideal number of exams for Fellowship is eight; necessary
material can be reorganized to fit.
Task Force on
Classes of Membership
 In May 2004, the Board discussed the various
transition options in the Task Force Report.
 Options ranged from
 Immediately granting FCAS to ACAS and
discontinuing ACAS
 Completion of additional requirements
 Discontinuing ACAS after a transition period and putting
the ACAS into run-off.
 Under no circumstances would current Associates
lose their status as members of the CAS.
Task Force on
Classes of Membership
 Additional information was requested for the
Board’s consideration during the discussion at
September Board Meeting.
 Survey of the Membership Advisory Panel (MAP).
 Feedback from Regional Affiliate Presentations.
 Interviews with recruiters on the effects of one class of
membership on attracting candidates.
 Interviews with actuarial science professors.
 Feedback submitted by members.
Task Force on
Classes of Membership
 Summary of additional feedback received:
 Over two-thirds (70%) of the MAP agreed with TF
recommendation of one class.
 More than three-fourths (77%) disagreed with the TF
recommendation to grant all ACAS the FCAS
designation without additional requirements.
 Most of the feedback has indicated that one class of
membership will not create a competitive disadvantage
for students.

Actuarial Science professors may disagree with this
Task Force on
Classes of Membership
Board Motions at September Board Meeting:


That the Board instruct the Executive Council to establish
a TF to propose within the next year a set of learning
objectives by which FCAS can be attained:
 with less material than the current exams,
 with fewer than the current 9 exams,
 while meeting the requirements of the IAA,
 while being consistent with the Centennial Goal.
It is the Board’s sense that this can be accomplished with
eight exams (or seven exams with a workshop or
seminar).
Task Force on
Classes of Membership
Board Motions at September Board Meeting:

Inform the CAS membership of the foregoing action, with
an indication that the Board supports a move to an
eventual single class of credentialed membership, with no
more new Associates, concurrent with the movement to a
shorter syllabus; and will seek membership reaction to this
plan. (It is expected that the then-current Associates will
either complete their remaining exams and become
Fellows, or remain Associates until they cease their
membership in the CAS.)
Membership Involvement
 Board is committed to obtaining member input.
 Granting voting rights requires an amendment to
the Constitution approved by Fellows, however,
the Board agreed to postpone further action on the
ACAS Vote, pending resolution of the Classes of
Membership issue.
 Moving to one class of credentialed member may
not require a change to the Constitution, but there
will be a thorough exchange of ideas.
Changes to Preliminary Education
 Current





Prerequisites: Linear Algebra and Statistics
Exam 1: Calculus and Probability (4 hours)
Exam 2: Interest, Economics, Finance (4 hours)
Exam 3: Actuarial Models– NOT JOINT (4 hours)
Exam 4: Actuarial Modeling (including applied stats) (4
hours)
Changes to Preliminary Education
Approved March 2004 Board Meeting
 Starting Spring 2005






Prerequisites: Linear Algebra and Calculus
Exam 1: Probability with Calculus (3 hours)
Exam 2: Interest (2 hours)
Exam 3: Actuarial Models & Statistics (4 hours)
Exam 4: Actuarial Modeling (4 hours)
Verification by Educational Experience:
Economics, Finance, Applied Stats
Validation by Educational Experience
 Option 1: Submit a course syllabus for approval, and
then a grade of B- or better in the course.
 Micro and Macro Economics
 Intermediate Corporate Finance
 Regression and Time Series (could be separate courses)
 Option 2: Pass an acceptable exam, such as the AP
exams for Micro and Macroeconomics, CFA exams, etc.
 Option 3: Pass college-level exams offered by the CAS.
CAS committed to offering these for at least 2 years.
 Option 4: Other experiences.
 Courses/seminars designed specifically for VEE credit
Transition
 2000 Syllabus




Exam 1  Exam 1
Exam 2  Exam 2 + VEE for Econ & Finance
Exam 3  Exam 3
Exam 4  Exam 4 + VEE for Applied Stats
 Pre-2000 Syllabus





Part 3A  VEE for Applied Stats
Part 4A  Exam 2
Part 4B  Exam 4
Part 5A  VEE for Economics
Part 5B  VEE for Finance
Why VEE?
 Most candidates take Econ and/or Finance
 No need to examine topics that require background but
not mastery.
 But verification is needed to meet international
standards.
 Test questions for Applied Stats stress
memorization rather than application.
 Our candidates need to learn how to appropriately apply
regression and time series models to real data.
 This competency cannot easily be validated in a timed
paper-and-pencil exam.
Impact on Travel Time
 Actuarial Science majors currently graduate
with exams.
 Unlikely to have much effect on these candidates.
 Other majors who take VEE courses in school
benefit from learning experience.
 Candidates who did not have VEE courses in
school:
 Can tackle VEE while studying for Interest exam.
 Or between exam “seasons.”
 VEE pass rates on first attempt should be very high.
Computer Based Testing
 First Administration for Exam 1 Expected
August 2005
 Expand to 4-6 computer-based administrations
in 2006.
 Candidate will receive results immediately
(beginning in 2006).
 Will expand to other exams if successful.
Modeling Workshop
 Education in risk integration techniques is
consistent with Centennial Goal.
 DFA added to Syllabus in 2000.
 DFA taken off Part 8 in 2003 due to inability to test in a
paper-and-pencil environment.
 Modeling Workshop Task Force established.
 Pilot a hands-on workshop experience in late 2004.
 Consider adding this as a future FCAS requirement
and/or continuing education opportunity.
Research Working Parties
 Research task forces charged to produce a
research product over a short timeframe.
 Should produce more cohesive, accessible
material in a consistent format, through the
collective, managed nature of the process.
 Should help the CAS effectively address longstanding research problems, and harness the
research energy of individual researchers.
 Have proven to be effective research mechanism
for GIRO!
Research Working Parties
2003-04
 Correlations and Dependencies Among All Risk
Sources
 Executive-Level Decision-Making Using Dynamic
Risk Modeling
 Elicitation and Elucidation of Risk Preferences
 Quantifying Variability in Reserves Estimates
Research Working Parties
2004-05
 Dynamic Risk Modeling Handbook
 Public-Access DFA Model
 Bornhuetter-Ferguson - Initial Expected Losses
 Tail Factors
I welcome your input regarding . . .









ACAS Task Forces
Education Initiatives
CAS Centennial Goal
International Issues
CAS Role Outside Traditional P/C Insurance
Membership
Research and Publications
What’s On Your Mind?
Questions?
Thank You!