Current CAS Issues and Directions Tom Myers, CAS Chairman of the Board Casualty Actuaries of Europe...

Current CAS Issues Current CAS Issues

and Directionsand Directions

Tom Myers, CAS Chairman of the BoardCasualty Actuaries of Europe

May 22, 2008

AgendaAgenda CAS Centennial GoalCAS Centennial Goal

CAS Membership by GeographyCAS Membership by Geography

ERM InitiativesERM Initiatives

New CAS Basic Education StructureNew CAS Basic Education Structure

Professionalism IssuesProfessionalism Issues

Upcoming EventsUpcoming Events

A New Seminar for 2009A New Seminar for 2009

Your InputYour Input

CAS Centennial GoalCAS Centennial Goal

The CAS will be recognized The CAS will be recognized globallyglobally as as a a leading resourceleading resource in in educatingeducating casualty casualty actuaries and conducting actuaries and conducting researchresearch in in casualty actuarial science. CAS members casualty actuarial science. CAS members will advance their expertise in pricing, will advance their expertise in pricing, reserving, and capital modeling; and reserving, and capital modeling; and leverage their leverage their skills in risk analysisskills in risk analysis to to become recognized as experts in the become recognized as experts in the evaluation of evaluation of enterprise risksenterprise risks, particularly for , particularly for the property and casualty insurance industrythe property and casualty insurance industry..

Geographic Geographic Distribution of CAS Distribution of CAS

MembershipMembership

0

500

1000

1500

2000

2500

3000

3500

4000

2008

U.S. Canada Bermuda Europe Other

Europe BreakdownEurope Breakdown40

26

74 4 3 2 1

0

5

10

15

20

25

30

35

40

Nation

U.K. Switzerland Germany France

Ireland Sweden Netherlands Spain

CAS Enterprise Risk CAS Enterprise Risk Management Management

InitiativesInitiatives CAS ERM Vision – Actuaries are qualifiedCAS ERM Vision – Actuaries are qualified

CAS Risk Management CommitteeCAS Risk Management Committee

2008 ERM Symposium (SOA/CAS and others)2008 ERM Symposium (SOA/CAS and others)

Online Course: Introduction to ERMOnline Course: Introduction to ERM

ERMERM22 (Enterprise Risk Management and (Enterprise Risk Management and

Modeling) Modeling)

Sessions at CAS Meetings and Seminars Sessions at CAS Meetings and Seminars

The ERM ActuaryThe ERM Actuary CAS is focused on enhancing our role in CAS is focused on enhancing our role in

ERM by:ERM by: Providing continuing education on ERM;Providing continuing education on ERM; Conducting research to address unanswered Conducting research to address unanswered

ERM questions (e.g., operational risks, risk ERM questions (e.g., operational risks, risk

aggregation)aggregation) Promoting actuarial skills in addressing ERM Promoting actuarial skills in addressing ERM

issues; issues; Exploring changes to the CAS syllabus.Exploring changes to the CAS syllabus.

CAS has not created an ERM designation CAS has not created an ERM designation (i.e., the CERA created by the SOA)(i.e., the CERA created by the SOA)

Revised CAS Basic Revised CAS Basic Education StructureEducation Structure

March 2008 CAS Board March 2008 CAS Board Meeting:Meeting:

Approved changes to the CAS Approved changes to the CAS basic education structure basic education structure that will affect current Exams that will affect current Exams 5-9.5-9.

Implementation will occur no Implementation will occur no sooner than 2011 sittings.sooner than 2011 sittings.


Features of the Revised Basic Education Features of the Revised Basic Education System:System:

No change to No change to Validation by Educational Experience (VEE) Validation by Educational Experience (VEE) Preliminary Actuarial Exams – Preliminary Actuarial Exams –

Probability, Probability, Financial Mathematics, Financial Mathematics, Financial Economics, Financial Economics, Life Contingencies and Statistics, and Life Contingencies and Statistics, and Construction and Evaluation of Actuarial ModelsConstruction and Evaluation of Actuarial Models


Features of the Revised Basic Education Features of the Revised Basic Education System:System:

Two module self-paced internet based Two module self-paced internet based course: course:

Introduction to P&C Insurance, Insurance Introduction to P&C Insurance, Insurance Operations, Specialized Lines of Business, Operations, Specialized Lines of Business, Miscellaneous Ratemaking Topics, Miscellaneous Ratemaking Topics, Actuarial Control Cycle.Actuarial Control Cycle.

Insurance Accounting Principles, Insurance Accounting Principles, Reinsurance, Background Law, Regulation Reinsurance, Background Law, Regulation of Insurance (Canadian and U.S. versions).of Insurance (Canadian and U.S. versions).


Features of the Revised Basic Features of the Revised Basic Education System:Education System:

A four-hour exam covering A four-hour exam covering Basic Basic RatemakingRatemaking andand Basic ReservingBasic Reserving..

A four-hour (nation specific) exam A four-hour (nation specific) exam covering covering Regulation and Regulation and Financial ReportingFinancial Reporting..

Course on ProfessionalismCourse on Professionalism..

Associateship CriteriaAssociateship Criteria


Features of the Revised Basic Features of the Revised Basic Education System:Education System:

Advanced RatemakingAdvanced Ratemaking exam. exam. Advanced Reserving, Advanced Reserving,

Reinsurance and ERMReinsurance and ERM exam. exam. Investment and Rate of ReturnInvestment and Rate of Return

exam.exam.

Fellowship CriteriaFellowship Criteria


Changes From the Current System:Changes From the Current System: Internet-based course in two modules Internet-based course in two modules

consisting of parts of current Exams 5, 6 consisting of parts of current Exams 5, 6 and 7and 7

Material only tested at the familiarity level Material only tested at the familiarity level is moved to an online format.is moved to an online format.

Reduction of the upper level exam hours Reduction of the upper level exam hours Currently 5 exams x 4 hours = 20 hours Currently 5 exams x 4 hours = 20 hours Will be 17 hours, 2 four-hour exams and 3 Will be 17 hours, 2 four-hour exams and 3

three-hour exams. three-hour exams.


Changes From the Current System:Changes From the Current System: AdditionsAdditions

Stochastic ReservingStochastic Reserving and and Reserve RangesReserve Ranges to the Advanced Reserving Exam and to the Advanced Reserving Exam and

Actuarial Control CycleActuarial Control Cycle to the internet- to the internet-based modules. based modules.

Deletion Deletion redundant elements of the current Exam 8 redundant elements of the current Exam 8

which have been moved to the preliminary which have been moved to the preliminary exams.exams.

Reduction of volume of study material.Reduction of volume of study material.


Rationale for the revisionsRationale for the revisions:: Leveraging the use of technology.Leveraging the use of technology. Testing material needing only Testing material needing only

familiarityfamiliarity can be more efficiently can be more efficiently done online as self-paced units. done online as self-paced units.

This MAY provide for a more timely This MAY provide for a more timely achievement of ACAS and FCAS achievement of ACAS and FCAS designationsdesignations..


Board is aware of the need to provide a Board is aware of the need to provide a transition process to minimize the transition process to minimize the disruption for candidates.disruption for candidates.

Approved options facilitate the conversion:Approved options facilitate the conversion: If a candidate has credit for only one of the If a candidate has credit for only one of the

required exams (either Exam 5 or Exam 6), the required exams (either Exam 5 or Exam 6), the candidate will be allowed to take just the part of candidate will be allowed to take just the part of the new exam for which he/she is missing credit the new exam for which he/she is missing credit in order to obtain credit for the new exam.in order to obtain credit for the new exam.

This half-exam option will be available for This half-exam option will be available for multiple sittings after the official conversion to multiple sittings after the official conversion to the new education structure, which will occur the new education structure, which will occur no sooner than 2011.no sooner than 2011.


Transition RulesTransition Rules:: Current Exam 5 – Credit for Half Exam on Current Exam 5 – Credit for Half Exam on

Basic Ratemaking and Internet Module 1.Basic Ratemaking and Internet Module 1. Current Exam 6 – Credit for Half Exam on Current Exam 6 – Credit for Half Exam on

Basic Reserving and Exam on Advanced Basic Reserving and Exam on Advanced Reserving, Reinsurance and ERM.Reserving, Reinsurance and ERM.

Current Exam 7 – Credit for Exam on Current Exam 7 – Credit for Exam on Regulation and Financial Reporting and Regulation and Financial Reporting and Internet Module 2.Internet Module 2.

Current Exam 8 – Credit for Exam on Current Exam 8 – Credit for Exam on Investments and Rate of Return.Investments and Rate of Return.

Current Exam 9 – Credit for Exam on Current Exam 9 – Credit for Exam on Advanced Ratemaking.Advanced Ratemaking.

New Educational New Educational MaterialsMaterials

Two consultants engaged to prepare an Two consultants engaged to prepare an entire set of materials for the ratemaking entire set of materials for the ratemaking and reserving portions of current CAS and reserving portions of current CAS Exams 5 and 6.Exams 5 and 6.

Implementation Task Forces working Implementation Task Forces working closely with authors.closely with authors.

Final publications due by December 31, Final publications due by December 31, 2008.2008.

Expected to be included on 2010 Syllabus Expected to be included on 2010 Syllabus of Exams.of Exams.

Candidate Code of Candidate Code of ConductConduct

Board approved adoption of a Code of Board approved adoption of a Code of Professional Ethics for Candidates, and Professional Ethics for Candidates, and Rules of Procedure for Disciplinary Rules of Procedure for Disciplinary Actions Involving CandidatesActions Involving Candidates

Requires Actuarial Candidates to adhere Requires Actuarial Candidates to adhere to the high standards of conduct, to the high standards of conduct, practice, and qualifications of the practice, and qualifications of the actuarial profession.actuarial profession.

Effective with registration for the 2008 Effective with registration for the 2008 Spring exam sitting.Spring exam sitting.

ProfessionalismProfessionalism

Code of Professional ConductCode of Professional Conduct PRECEPT 2. PRECEPT 2. An Actuary shall perform Actuarial An Actuary shall perform Actuarial

Services only when the Actuary is qualified to Services only when the Actuary is qualified to do so on the basis of basic and continuing do so on the basis of basic and continuing education and experience and only when the education and experience and only when the Actuary satisfies applicable qualification Actuary satisfies applicable qualification standards.standards. ANNOTATION 2-1. It is the professional responsibility of ANNOTATION 2-1. It is the professional responsibility of

an Actuary to observe applicable qualification standards an Actuary to observe applicable qualification standards that have been promulgated by a Recognized Actuarial that have been promulgated by a Recognized Actuarial Organization for the jurisdictions in which the Actuary Organization for the jurisdictions in which the Actuary renders Actuarial Services and to keep current regarding renders Actuarial Services and to keep current regarding changes in these standards.changes in these standards.


Code of Professional ConductCode of Professional Conduct PRECEPT 3. PRECEPT 3. An Actuary shall ensure An Actuary shall ensure

that Actuarial Services performed by or that Actuarial Services performed by or under the direction of the Actuary under the direction of the Actuary satisfy applicable standards of practice.satisfy applicable standards of practice. ANNOTATION 3-1. It is the professional ANNOTATION 3-1. It is the professional

responsibility of an Actuary to observe responsibility of an Actuary to observe applicable standards of practice that have been applicable standards of practice that have been promulgated by a Recognized Actuarial promulgated by a Recognized Actuarial Organization for the jurisdictions in which the Organization for the jurisdictions in which the Actuary renders Actuarial Services and to keep Actuary renders Actuarial Services and to keep current regarding changes in these standards.current regarding changes in these standards.


Actuaries practicing in the United Actuaries practicing in the United States:States:

Must follow standards promulgated by Must follow standards promulgated by the American Academy of Actuaries the American Academy of Actuaries and Actuarial Standards Board.and Actuarial Standards Board.

Actuaries practicing in other countries:Actuaries practicing in other countries: Responsible for determining the Responsible for determining the

standards that apply in their country of standards that apply in their country of practice. practice.

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

((Who Do They Apply to?)Who Do They Apply to?) The new Qualification Standards apply The new Qualification Standards apply

to to allall actuaries performing actuaries performing Actuarial Actuarial Services,Services, which includes opinions, which includes opinions, intended by that actuary intended by that actuary to be relied to be relied uponupon by the person or organization to by the person or organization to which the opinions are provided.which the opinions are provided.

Such opinions are now considered to be Such opinions are now considered to be Statements of Actuarial Opinion (SAO’s)Statements of Actuarial Opinion (SAO’s) – basically any professional opinion – basically any professional opinion expressed by an actuary in the course of expressed by an actuary in the course of performing Actuarial Services. performing Actuarial Services.

U.S. Qualification U.S. Qualification StandardStandard

(Who is a Qualified Actuary?)(Who is a Qualified Actuary?)

An actuary who meets the following An actuary who meets the following criteria:criteria: Member of the Academy, orMember of the Academy, or FellowFellow or Associate ofor Associate of the CASthe CAS or the or the

SOA, SOA, Fellow of the CCA, orFellow of the CCA, or Member or Fellow of ASPPA, or Member or Fellow of ASPPA, or Fully qualified member of another IAA-Fully qualified member of another IAA-

member organization; andmember organization; and Three years of responsible actuarial Three years of responsible actuarial

experienceexperience


(Specialty Track Requirements)(Specialty Track Requirements)

An actuary is also required to:An actuary is also required to:

Have Responsible Actuarial Have Responsible Actuarial

Experience inExperience in

Specific Area of Actuarial Practice Specific Area of Actuarial Practice

Relevant to the subject of Actuarial Relevant to the subject of Actuarial

OpinionOpinion


(New CE Requirements)(New CE Requirements)

Annual continuing education requirements Annual continuing education requirements

will increase to 30 hours per yearwill increase to 30 hours per year

Minimum three hours on professionalism Minimum three hours on professionalism

topics topics

Minimum six hours from “organized” Minimum six hours from “organized”

activities activities

A credit hour is 50 minutes A credit hour is 50 minutes

2008 is a transition year (24 hours required)2008 is a transition year (24 hours required)

SOA CE RequirementsSOA CE Requirements

March 2007 – SOA Board approved a March 2007 – SOA Board approved a motion establishing a Continuing motion establishing a Continuing Professional Development Requirement for Professional Development Requirement for SOA members. SOA members.

Nov 2007 – Released exposure draft to Nov 2007 – Released exposure draft to allow members to comment on the allow members to comment on the provisions; comment deadline February provisions; comment deadline February 2008.2008.

June 2008 – Board will approve a final June 2008 – Board will approve a final implementation plan.implementation plan.

Jan 2009 – SOA requirement effective.Jan 2009 – SOA requirement effective.

Future EventsFuture Events

CAS Spring Meeting, June 15-18, CAS Spring Meeting, June 15-18, Quebec – Joint Meeting Day with CIA Quebec – Joint Meeting Day with CIA and SOAand SOA

2008 ASTIN Colloquium, July 13-16, 2008 ASTIN Colloquium, July 13-16, Manchester, UKManchester, UK

Casualty Loss Reserve Seminar, Casualty Loss Reserve Seminar, September 18-19, Washington, D.C.September 18-19, Washington, D.C.

CAS Annual Meeting, November 16-CAS Annual Meeting, November 16-19, Seattle19, Seattle

Look for announcements regarding Look for announcements regarding upcoming webinars.upcoming webinars.

Changes to Changes to Professional Professional EducationEducation

In 2007, a Task Force considered In 2007, a Task Force considered ways to restructure the Ratemaking ways to restructure the Ratemaking Seminar and Predictive Modeling Seminar and Predictive Modeling Seminar.Seminar.

The Executive Council approved The Executive Council approved building a new Seminar that will building a new Seminar that will draw on the best aspects of the draw on the best aspects of the Traditional Ratemaking Seminar and Traditional Ratemaking Seminar and the newer Predictive Modeling the newer Predictive Modeling Seminar. Seminar.


New Seminar will recognize and New Seminar will recognize and reflect how the role of the actuary reflect how the role of the actuary has expanded over the past twenty has expanded over the past twenty years.years.

Integrated seminar that covers:Integrated seminar that covers: Product developmentProduct development Product managementProduct management PricingPricing UnderwritingUnderwriting MarketingMarketing


There will be a Predictive Modeling There will be a Predictive Modeling Seminar in October 2008.Seminar in October 2008.

In 2009, the CAS will not offer a In 2009, the CAS will not offer a Ratemaking Seminar or a Predictive Ratemaking Seminar or a Predictive Modeling SeminarModeling Seminar

These offerings will be replaced by the These offerings will be replaced by the new Seminar. new Seminar.

The dates of the new Seminar in The dates of the new Seminar in 2009 have not yet been finalized. 2009 have not yet been finalized.

Strategic Planning Strategic Planning Committee welcomes Committee welcomes your input regarding:your input regarding:

Catastrophe availability and cost issuesCatastrophe availability and cost issues – How are these – How are these actuarial issues? For example, coverage where it was not actuarial issues? For example, coverage where it was not intended (Katrina).intended (Katrina).

Communications SkillsCommunications Skills – More crucial than EVER for – More crucial than EVER for actuaries. Should the CAS provide communication training?actuaries. Should the CAS provide communication training?

Rapid Advance of Technology and ScienceRapid Advance of Technology and Science – How does – How does the actuary balance rapid technological changes and the actuary balance rapid technological changes and expanding data availability with an equal skill for analysis expanding data availability with an equal skill for analysis and judgment? (More information/less data)and judgment? (More information/less data)

Outsourcing/offshoringOutsourcing/offshoring – Competition from lower cost – Competition from lower cost qualified “offshore” actuaries – threat or expansion?qualified “offshore” actuaries – threat or expansion?

Merge the North American Actuarial Organizations?Merge the North American Actuarial Organizations? WHAT ELSE?WHAT ELSE?

Thank You!Thank You!

Tom Myers Casualty Actuarial Society

Chairman of the BoardCasualty Actuaries of Europe

May 22, 2008

Current CAS Issues and Directions Tom Myers, CAS Chairman of the Board Casualty Actuaries of Europe...

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