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Examination and Other Requirement Details

Spring 2007 Basic Education Catalog

Examination and Other Requirement Details

Fundamentals of Actuarial Practice (FAP)

Course Structure

FAP is a web–based, e–Learning course–a course where candidates acquire and use knowledge that is distributed and facilitated by electronic means. The e–learning facility serves as the overarching framework from which candidates will obtain information on other resources and activities required to complete the course.

FAP is set in the context of a problem–solving framework called the control cycle. This framework will help candidates understand the business environment and will expose candidates to situations and tools that are common and useful, regardless of area of actuarial practice. Simply stated, the control cycle is a general and practical problem-solving framework that an actuary uses to perform work.

FAP is comprised of eight modules housed in an e–learning facility. Candidates will complete the modules in sequence because the content in later modules builds upon the content of earlier modules. Each module is intended to reinforce certain aspects of the control cycle.

The Eight FAP Modules

Module 1: Introduction/The Role of the Professional Actuary

The focus of this module is to provide an overview of the basic framework for actuarial work and functions using the control cycle as the model. Additionally, the module provides candidates with an overview of the actuarial profession, the major areas of practice, and the skills required of actuaries.

Module 2: Core External Forces

The focus of this module is to describe and demonstrate how external forces (outside of the actuarial sphere) effect and integrate into actuarial work; how they interrelate and change.

Module 3: Risk in Actuarial Problems

The focus of this module is to enable candidates to learn how to identify and define problems in various practice areas. This module creates the foundation for understanding risk in actuarial problems and the commonalities that exist among problems so that they can be effectively addressed regardless of area of actuarial practice.

Module 4: Actuarial Solutions

This module builds upon Module 3. The primary goal of the module is to create a foundation for candidates to understand actuarial problems across practice areas and demonstrate how the entire control cycle is applied. Candidates will gain practical experience with key concepts related to traditional actuarial solutions and understand how actuaries provide value to their employers and/or clients.

Module 5: Actuarial Models

The focus of this module is to introduce fundamental concepts behind the tools used to solve common actuarial problems. Using various models, the module introduces candidates to coverages and benefit/policy design components of several actuarial solutions.

Module 6: Model Selection and Solution Design

The focus of Module 6 is to provide candidates with an overview of model selection and model building and how these processes fit within the context of the control cycle. The module creates the foundation for candidates to understand how to select an appropriate model for a given problem and design a solution.

Module 7: Selection of Initial Assumptions

This module builds upon previous modules focused on helping you learn how to identify and define problems and design solutions. The goal of this module is to introduce the methods and tools actuaries use to identify, select and quantify assumptions. Candidates will understand how the identification, selection and quantification of assumptions finalizes the 'design solution' element of the control cycle and transitions actuarial work to that of monitoring results.

Module 8: Monitoring Results and Completing the Control Cycle

The final module of the FAP course focuses on the purposes of monitoring experience and the techniques used by actuaries. The 'monitor experience' element of the control cycle is dependent upon the objectives and definition of the problem addressed and the solution designed by the actuary. Candidates learn how monitoring results provides feedback to the other control cycle elements and how the feedback loop, in context with the work of the actuary, completes the control cycle.

Online and Offline Education

FAP education blends online (presented on the computer) and offline (external to the computer) content, activities and assessments. Offline content includes readings from the following books which candidates are responsible for purchasing:

Bellis, C., Shepherd, J., and Lyon, R., 2003, Understanding Actuarial Management: The Actuarial Control Cycle. Institute of Actuaries of Australia

Bluhm, W. F., 2003, Group Insurance, (Fourth Edition), ACTEX Publications

Brown, R. L. and Gottleib, L.R., 2001, Introduction to Ratemaking and Loss Reserving for Property and Casualty Insurance (Second Edition), 2001, ACTEX Publications

Easton, A.E. and Harris, T. F.,1999, Actuarial Aspects of Individual Life Insurance and Annuity Contracts,ACTEX Publications

Lam, J., 2003. Enterprise Risk Management: From Incentives to Controls. John Wiley & Sons, Inc.

Luenberger, D.G., 1998. Investment Science, Oxford University Press

McGill, D.M., Brown, K.N., Haley, J.J., and Schieber, S.J., 2005, Fundamentals of Private Pensions. (Eighth Edition), Oxford University Press

FAP Exam 1 and Final Assessment

FAP candidates must pass FAP Exam 1 and a Final Assessment. A computer–based FAP Exam 1 follows completion of Modules 1 through 5, and a Final Assessment at the end of Module 8 covers Modules 6–8. All modules must be completed in order, but candidates may sit for the Final Assessment prior to sitting for FAP Exam 1. FAP Exam 1 will be administered on February 28, 2007. Other administrations during the year are being planned The Final Assessment becomes available January 31, 2007 and will remain on–demand to qualifying candidates.

FAP Fees

The standard fee for FAP is $2100 and includes Modules 1–8, FAP Exam 1 and the Final Assessment. For those candidates needing specific portions of the FAP due to the transition, $1400 will be charged for Modules 1–8 and FAP Exam 1 or the Final Assessment. For candidates retaking the FAP exam or Final Assessment, the fee is $500.

FAP Refund Policy

In order to receive a refund, cancellation must occur before the candidate has logged in to access the course. In this case, the total amount will be refunded less the administrative fee of $100. Refund requests may be submitted to Refunds for FAP Exam 1 and the Final Assessment must be requested by the day before the exam or before logging in to the Final Assessment.

FAP Registration

For FAP registration information or questions regarding FAP, contact