Changes to the CAS Basic Education Structure Outlined

By Fiona So

Editor's Note: This article was originally published in the June 2008 issue of Future Fellows.

In March, the CAS Board of Directors unanimously approved a new basic education structure. It was initially developed by a board task force and then fleshed out by the CAS Syllabus Committee. The plan allows many of the goals outlined in the 2006 White Paper on CAS Education Strategy to be achieved.

No changes to Exams 1–4 and the three VEE requirements were included in this proposal. Broadly speaking, the major changes to the education structure are:

For Associateship:

Exams 5, 6, and 7 will be replaced by two Internet modules and two 4–hour exams. The exams will be (1) Basic Ratemaking and Basic Reserving and (2) Insurance Laws and Insurance Accounting Principles.

Module 1 will cover introduction to P&C insurance, insurance operations, specialized lines of business, miscellaneous ratemaking topics, and the Actuarial Control Cycle. Module 2 will cover insurance accounting principles, reinsurance, background law, and regulation of insurance.

The exam on Insurance Laws and Insurance Accounting Principles and Module 2 will be nation–specific and offered in Canadian and U.S. versions.

For Fellowship:

Exams 8 and 9 will be replaced by three 3–hour exams on (1) Advanced Reserving, Reinsurance and ERM, (2) Investment and Rate of Return, and (3) Advanced Ratemaking.

An important issue that is resolved by the new exam structure is how certain topics are now tested. The CAS Board, when it issued the White Paper in 2006, concluded that for some topics only familiarity rather than in–depth knowledge would be required to fulfill the basic education requirements. These background topics include information on insurance operations, specific lines of business, reinsurance and certain legal concepts. For these topics the current exam questions mostly ask candidates to recall a list of considerations or requirements. Rather than testing candidates on these topics in an exam environment, the new education structure will test these topics through an Internet module setting. The intent is to provide appropriate coverage of these important topics through a process that allows candidates to proceed at their own pace rather than rely on a traditional written exam administered under tight time constraints.

Because the board felt that there was a natural linkage in ratemaking and reserving, a better way to test candidates on these topics is to test them together in one exam. Under the new structure, this goal can now be achieved by grouping the core topics from current Exams 5 and 6 into a single exam. Moving the familiarity–level topics from current Exams 5 and 6 to an Internet module allows the remaining basic ratemaking and basic reserving topics to be tested in–depth within a four–hour exam. Also, the White Paper proposed the development of educational materials to replace the "current patchwork of readings" on the core topics on current Exams 5 and 6. A separate initiative to create a set of ratemaking and reserving readings that have a consistent tone and style specifically designed to educate is well underway. It is anticipated that these new educationally focused materials will be part of the new unified syllabus for the new 4–hour exam, replacing the piecemeal research papers currently used as study material for current Exams 5 and 6.

The remaining current Exam 6 material will be used to create a third Fellowship exam called Advanced Reserving, Reinsurance, and ERM. The other Fellowship exams will see their overall syllabi reduced as a result of removing the topics currently on Exam 8 that are now tested in the joint CAS/CIA/SOA exams, and the movement of the risk loads topics from Exam 9 to Exam 8. The natural way of dividing up these topics allows each of the Fellowship exams, although one more than before, to be shortened to three hours each.

The CAS Board and the Syllabus Committee believe the new education structure, anticipated to be implemented in 2011, will resolve many issues that were raised in the White Paper, achieve the proposed goals outlined in the White Paper, and address many comments received after the White Paper was published. For more details on the changes that will take place and draft transition rules, please visit the announcement in the "Admissions/Exams" section.

Fiona So is a Candidate Representative to the Candidate Liaison Committee.