Nebraska Actuaries Club

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SOA Education Update

• Nebraska Actuaries Club
• December 13, 2007
• Stuart Klugman, FSA, Actuarial Education
  Consultant, SOA and Professor of Actuarial
  Science, Drake Univ.

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Todays Presentation

• Update on Education Redesign
• Accomplishments to date
• Plans for 2008
• Summary of current qualification system
• CERA designation
• Continuing Education

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2005-07 Redesign - Objectives

• Provide a more practice-relevant syllabus
• Better prepare actuaries for the future
• Reduce travel time to ASA/FSA

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Key Accomplishments - 2005

• Introduced revised Preliminary Exams
• Introduced Validation by Educational Experience
  (VEE)

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Key Accomplishments - 2006

• Introduced computer-based testing for Exam P
• Rolled out 8 FAP modules
• Administered first FAP1 Examination

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Key Accomplishments - 2007

• Added financial economics to Preliminary
  Education
• Provided instant results for Exam P
• Began on-demand administration of FAP Final
  Assessment
• Administered FAP Exam 1 (four times by year-end)

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Key Accomplishments - 2007

• Administered Spring and Fall fellowship exams
• Completed FSA modules
• Introduced CERA designation

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To Do in 2008

• Implement first expanded Fellowship Admissions
  Course (March)
• Revise and update FAP modules (through the year)
• Replace FAP1 Exam with Interim Assessment
• Continue to evaluate Education Redesign

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Observations

• A massive undertaking we owe our success to
  hundreds of volunteers
• Tried to be adaptable and responsive to candidate
  and employer feedback

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Overview of Education System

• Not tested
• Preliminary Exams
• Fundamentals of Actuarial Practice
• Fellowship Exams
• Fellowship Modules
• Expanded Fellowship Admissions Course

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Not Tested

• Calculus indirectly tested on all exams
• Validation by Educational Experience (VEE)
• Introduction to Economics
• Corporate Finance
• Applied Statistics

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Preliminary Exams

• P probability computer-based instant
  results in 2007
• FM financial mathematics financial economics
  added in 2007 computer-based in 2008
• MLC and MFE life contingencies and financial
  economics
• C actuarial models

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Fundamentals of Actuarial Practice (FAP) Course

• Focus on education over examination
• e-Learning via web-based modules
• Present KEY facts, concepts, processes,
  procedures and principles
• Practical applications, expert experience,
  examples, case studies and traditional readings
• Provide opportunities to practice and receive
  feedback (activities and exercises)

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Control Cycle
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FAP Course Evaluation

• One controlled and graded exercise following
  Module 5 (Interim Assessment)
• Interim Assessment must be successfully completed
  after Module 5 before proceeding
• One controlled and graded exercise following
  Module 8 (Final Assessment)
• Final Assessment cannot be taken before Modules
  1-8 and Interim Assessment are completed

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FAP Course - Registrations and Candidate Status

• More than 5,000 candidates have registered for
  FAP
• More than 1,000 candidates have completed the FAP
  course

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FAP Improvements Planned

• Reduce redundancy in readings and reduce the
  amount of readings, particularly Module 2
• Increase the use of case studies for all modules
• Improve relevancy of end-of-module exercises
• Coordinate end-of-module exercises with
  assessments
• Work on these changes has begun with release in
  first half of 2008

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FSA Education

• Critical content rigorously examined
• Other relevant content covered via modular,
  e-Learning education with exercises
• Some advanced applications also covered in
  educational modules
• Maintain and expand the FAC by including a
  communication skills component

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FSA Education Redesign

• Examinations 2 for each practice area
• 2 practice-specific e-Learning modules
• Capstone experience
• Decision Making and Communication Module
• Expanded Fellowship Admissions Course

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FSA Exams

• Written answer examinations.
• Candidates choose from these tracks
• Finance/Enterprise Risk Management.
• Group Health.
• Investment.
• Individual Life Annuities.
• Retirement Benefits.

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FSA Modules

• In addition to the two FSA exams, there are 2
  e-Learning modules required for each track
• Topics that do not lend themselves to an
  examination format or that do not need to be
  rigorously tested.
• Optimal level of consistency across practice
  areas with some flexibility.
• End-of-module exercises review and grading for
  accountability (similar to FAP).

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FSA Modules

• Financial Economics (All tracks except Group
  Health)
• Financial Reporting/Operational Risk (Finance/ERM
  track)
• Health Systems Overview (Group Health track)
• Regulation and Taxation (Individual Life
  Annuities track)
• Pricing, Reserving and Forecasting (Group
  Health track)
• Social Insurance (Retirement Benefits track)
• Investment Strategies (Investment track)

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Capstone Experience

• Decision Making and Communication (DMAC) Module
• All other FSA requirements must be completed
  prior to beginning the module
• Complex business problems without a single
  solution
• Communications and business skills
• End-of-module project graded pass/fail one year
  time limit for completion

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Capstone Experience

• Fellowship Admissions Course
• Professionalism and ethics
• Communications skills
• Ten minute oral presentation based on DMAC
  project, with feedback

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Conversion Rules

• Appear on the SOA websites Education Redesign
  page
• Questions on specific candidate situations may be
  sent to eq2005_at_soa.org

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New ASA-level ERM Credential

• Approved by SOA Board in November 2005.
• Helps members to exploit ERM opportunities
• Differentiates in marketplace from traditional
  ASA
• Uses exams and modules within the new structure
• Name approved in March 2007
• Chartered Enterprise Risk Analyst (CERA)

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CERA - Key Points

• CERAs
• Are to be considered actuaries
• Will complete an alternative ASA pathway and will
  receive their ASA designation at the same time as
  their CERA designation

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CERA - Marketplace

• CERAs will be employed primarily in banking and
  broader financial services, whereas the ASA will
  have its traditional stronghold in the insurance
  sector
• Marketing efforts will be directed at publicizing
  the unique skill set of CERAs

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CERA - Requirements

• For individuals new to the field
• Exam P.
• Exam FM (2007 and later)
• VEE Economics.
• Exam MFE (2007 and later)
• Exam C (2007 and later)
• Advanced Finance/ERM Exam
• Operational Risk Module
• Associate Professionalism Course (APC)

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CERA pathway
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CERA - For Current Members

• If an FSA via the ERM track, qualified for CERA
• Other FSAs who practice in the ERM area will be
  provided a pathway to CERA that will involve a
  seminar experience. Information is available at
  www.ceranalyst.org
• As of December 1, 92 CERAs

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Education Examination - Get Involved

• For the FSAs in todays audience, do you want to
  be involved? There are many opportunities to
  volunteer
• Components - PE, FAP and FSA.
• Roles - Education Committees, Exam Committees,
  Subject Matter Experts, Content Developers,
  Exercise Developers and Graders.
• For information on volunteering, please contact
  Judy Powills at jpowills_at_soa.org.

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For More Information

• General comments and questions may be sent to
  eq2005_at_soa.org.
• Questions specific to VEE may be sent to
  vee_at_soa.org.
• Questions specific to FAP modules and exams may
  be sent to fap_at_soa.org.
• Questions specific to FSA modules may be sent to
  fsamodules_at_soa.org.

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Continuing Professional Development

• SOA Board has already declared that there will be
  a CPD requirement
• Only remaining question is the rules
• Exposure draft available from SOA website
• Comment period ends February 22, 2008

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CPD proposal

• As of each December 31, must have 60 units over
  preceding two years
• Each minute is worth 0.02 units
• At least 50 of units must be in structured
  education (interaction between participants)

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CPD proposal

• Per cycle,
• At least 3 units in professionalism (structured)
• At least 30 units in job-relevant skills
• At most 15 units in business and management
  skills
• At least 7.5 units structured and not from own
  employer

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Definintions

• Professionalism Professional and ethical
  standards expected of actuaries when carrying out
  their professional obligations.
• Job relevant CPD credits are job-relevant if
  they broaden or deepen a members knowledge of
  work
• Business and management skills Not unique to the
  actuarial profession, that improve personal
  effectiveness

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CPD proposal

• Scoring above 0 on a Fellowship exam earns
  structured credits Module completion earns 7.5
• Normal work duties cannot count as self-study
  credit
• All members are subject to this requirement,
  beginning with attaining first credential first
  verification is December 31, 2 years later

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CPD proposal

• First compliance is December 31, 2010
• Members meeting the AAA or CIA qualification
  standards are deemed to meet with SOA standard
• If not meeting the standard, must place
  (inactive) after credential
• If on retirement dues waiver and not meeting the
  standard, may use (emeritus) instead

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Questions Answers