Examination Redesign

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Examination Redesign

• UW-Madison Actuarial Club
• DeeAnna Harris
• Wednesday March 31, 2004

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Information From2005-07 Redesign WebcastFriday,
March 5, 2004

• Presenters
• Stuart Klugman, F.S.A.
• Steve Eadie, F.S.A., F.C.I.A.
• Al Ford, F.S.A., M.A.A.A., E.A.

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• The Society of Actuaries formed a task force in
  2001 to reevaluate the education process
• Here are the three key objectives
• produce a syllabus that is more relevant to
  actuarial practice
• prepare actuaries for the future
• reduce travel time to completing exams

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Key Changes

• Preliminary exams more efficient, more relevant.
• Emphasis on core actuarial topics and on new
  reference material
• Course 5 and parts of Course 6 and 7 replaced by
  more efficient and relevant FAP Course and FSA
  modules
• Creation of an ERM specialty track (8)

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At A Glance

• ASA Education
• Preliminary Education (PE)
• 5 Topics as Prerequisites
• 3 Subjects Validation by Educational Experience
• 4 Examinations
• Fundamentals of Actuarial Practice (FAP)
• 8 interactive modules
• 1-6 exercises per module
• 2 Examinations
• APC

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At A Glance cont.

• FSA Education
• Examinations 2 for each practice area
• Individual Insurance
• Health, Group Life Managed Care
• Retirement Benefits
• Investment
• Finance, Enterprise Risk Management
• 4 or more interactive modules
• Capstone Seminar
• FAC

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Preliminary Ed. Prerequisites

• These are not directly validated
• Calculus (tested indirectly in exams)
• Linear Algebra
• Introductory Accounting
• Elements of Business Law
• Mathematical Statistics (tested indirectly in
  exams, with a few topics directly tested)

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PE Validation by Educational Experience

• Three Subjects
• Economics (micro and macro)
• Corporate Finance (intermediate level)
• Applied Statistical Methods
• Subjects which are best learned in a classroom or
  are somewhat peripheral to actuarial science
• Course minimum B- or equivalent
• Other opportunities for meeting this requirement
  will be identified

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PE Examinations

• Exam P Probability
• Probability and supporting calculus
• 3-hour examination
• Exam MF Mathematics of Finance
• Theory of interest and introduction to financial
  economics
• 2-hour examination

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PE Examinations cont.

• Exam M Actuarial Models
• Similar to Current Course 3
• 4-hour examination
• Exam C Construction and Evaluation of Risk Models
• Similar to current Course 4
• 4-hour examination

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Fundamentals of Actuarial Practice (FAP)

• Focus on education over accreditation via
  modular-based instruction
• Opportunity to practice and receive feedback
  (activities and exercises)
• Common threads include professionalism,
  validation of results, stochastic versus point
  estimates, application of the law

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FAP Course Modules

• Module 1 Role of the Professional Actuary
• Module 2 Core External Forces
• Module 3 Common Actuarial Problems/Assignments
• Module 4 Solutions to Selected Actuarial Problems

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FAP Course Modules cont.

• Module 5 Design and Pricing of an Actuarial
  Solution
• Module 6 Selection of an Actuarial Design and
  Model
• Module 7 Selection of Initial Assumptions
• Module 8 Monitoring Experience

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FAP Course Exercises

• Mandatory with some choices available
• Some across practice area some within practice
  areas
• Formal validation for accountability

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FAP Course Examinations

• Two Examinations
• First exam will follow the completion of Module 5
• Second exam will follow completion of Module 8
• Multiple Choice
• Potential for on demand

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FSA Examinations

• Two exams for each practice area
• Each exam similar in size to Course 8
• Optimal level of consistency across practice
  areas with some flexibility
• Continue control cycle framework
• Design and Pricing of Products/Plans Exam
• Effect on Company/Sponsor Exam

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Positive Impact on Time Travel

• PE structure offers efficient alternatives (e.g.,
  prerequisites and validation by experience)
• PE and FAP exams more frequent administration,
  potential for on demand administration
• Innovative design of FAP course enables learning
  and reduces need to retake
• Candidates can begin FAP modules while studying
  for PE exams
• Candidates can begin FSA modules while studying
  for FSA exams

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Implementation Plan

• Preliminary Education 2005
• FAP Course 2006
• FSA Education Component - 2007

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Conversion
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Conversion cont.
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Conversion cont.
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• Check out the SOA website on the specifics of the
  examination redesign
• http//www.soa.org/eande/conversion.pdf