The NAIC and SOA: What Really Happened?
If you were like me, you were caught off-guard by the recent Society of Actuaries (SOA) announcement that their general insurance (GI) fellowship track had been accepted by the National Association of Insurance Commissioners (NAIC) as meeting the educational standards required of a qualified actuary. I remember when the SOA created the GI track and it failed to meet NAIC standards; however, I did not know what was being done to change that or how close the SOA was. The news of the approval left me with many questions — how long has this process been going on? Was this outcome expected and, if so, discussed at the time of the proposed CAS/SOA merger? What differentiates the content contained in the two exam structures? What is the basic knowledge I need to have to consider myself an actuary? After some digging, I was able to get answers to some of these questions.
What is a "qualified actuary?"
Essentially, a qualified actuary is an individual who can sign off on the reserves contained in a company's annual statement. The requirements for being considered a qualified actuary can be found in the instructions for the statement of actuarial opinion (SAO), which are produced by the NAIC and include education, experience and professionalism components. Under the current draft, education requirements can be satisfied by either having your FCAS, having your ACAS and passing Exam 7, or obtaining an FSA through the GI track while taking certain prescribed exams (for some fellowship requirements the SOA allows you to choose between multiple options). CAS Fellows and Associates who obtained their designations with previous versions of exams will have to verify they have credit for exams equivalent to the current CAS exam system. More details will be available on the CAS website.
How do the CAS/SOA meet the education standards of a qualified actuary?
The initial review of the SOA's GI track was done by an independent consultant who found that the program lacked necessary breadth and depth to meet minimum educational standards. But what exactly were those standards? Unlike when you get an exam question wrong and you turn to the Examiner's Report to see what would have gotten you full credit, the SOA did not have the answer key to become a minimally qualified candidate. The standards are intended to be reviewed every 5-10 years, and in the aftermath of the GI track review, it was clear that this time the standards needed to be codified and written down.
Since the NAIC isn't an actuarial organization, should they be expected to determine the educational criteria required of a qualified actuary? That task was instead left to a committee of subject matter experts (SMEs) from major stakeholders — the CAS, SOA and American Academy of Actuaries (AAA). Committee members performed a job analysis for a qualified actuary. They developed over 90 knowledge statements covering the breadth of information a qualified actuary needs, from which the NAIC created educational standards identifying depth of knowledge required. These standards also identified what needed to be learned through basic education and what could be learned through experience or continuing education. From there, it was up to each actuarial organization to map how its exam structure satisfied each minimum basic education standard. These mappings have been kept confidential by each organization. Another group of SMEs evaluated each mapping and determined that, because the SOA had made significant changes to their curriculum since the initial review and during the development of these educational standards, they would require only a few additional changes to have the GI track receive NAIC approval. Similarly, with a few tweaks to certain exam syllabi, the current CAS qualifications (FCAS or ACAS + Exam 7) would continue to satisfy the NAIC requirements.
The NAIC standards have not been published yet because they are still in the final stages of being formally adopted. But you can get an idea of the content and level of detail from the sample entry below of one of the many knowledge statements taken from the current draft.
What do I need to know to be considered an actuary?
It seems that basic education has increasingly diverged between the CAS and SOA in the recent past. But if they both meet the NAIC standards for a qualified actuary, then perhaps there's more in common than we realize (or care to admit). The obvious point to make is that fellowship is required in the SOA to satisfy NAIC standards; in the CAS, we still have two full exams (8 and 9) past these requirements in order to obtain Fellowship. That's not to say a 1:1 relationship exists between the two curricula — the SOA inevitably has material in their exams beyond the NAIC standards just as the CAS does. But how much excess is there and how is it dispersed through their exam structure? Or, more broadly, why would either organization test any content beyond what's required of a qualified actuary in the path to fellowship instead of offering it as continuing education or even a separate certification?
One thing to keep in mind is that being a qualified actuary is closely tied to reserving, and that there are other areas of practice within the actuarial field. But we must continually evaluate our path to Fellowship to ensure that it is meeting the needs of the times. Consider, for example, if we had ACAS after MAS-II and separate FCAS tracks in ratemaking, reserving and predictive analytics. Or perhaps we do away with ACAS altogether and only have one designation after Exam 7, with post-FCAS specialty tracks offered through iCAS. We can't be afraid to ask these questions of ourselves and must embrace change when needed in order to stay relevant.
What would your ideal FCAS look like? If you filled out the first annual CAS Candidate Survey sent out over the summer, you may have seen a related question or two asking about the value of obtaining an FCAS after achieving your ACAS. Hopefully, you took advantage of the opportunity to voice your opinion about this and other topics; if not, don't worry! It's the first annual survey, and there will be smaller, more focused "Hot Topics" surveys coming out soon, too. In the meantime, you can always send your thoughts to the Candidate Liaison Committee through our online form on the CAS website, and we'll make sure your views get brought up in future conversations.
