Education And Qualification 2005: An Update
Education and Qualification 2005: An Update
by Stuart Klugman
In 1999, the Society's Board began a process to define skills that actuaries would need in the future. As part of that discussion, a separate task force was appointed to investigate and report back to the Board. In October 2001, the Board accepted the recommendations of that task force and appointed two working groups to create a plan that would transform the recommendations into a concrete educational system. One working group was charged with working on preliminary education (Stuart Klugman, chair) and the other working group was to look at the remainder of the system (Steve Eadie, chair). These two large committees along with advisory teams from the various practice areas fulfilled the Board's mandate to involve a broad spectrum of the profession. Interim reports were distributed to the membership in the summers of 2002 and 2003 with the final report earning Board acceptance at its June 2003 meeting.
The timeline adopted by the Board was to implement the changes over a three-year period. Preliminary education will be in place for 2005, the Fundamentals of Actuarial Practice course in 2006 and the Fellowship courses in 2007. These activities are chaired by Stuart Klugman (and those done jointly with the CAS are co-chaired by Tom Myers), Steve Eadie and Al Ford, respectively. This article provides an update of the activities of these three groups.
Preliminary Education
Task forces were formed to provide learning objectives and a course of reading for each of the four preliminary education examinations. Key changes for 2005 are (using the new identifiers):
- Calculus has been removed from Exam P (Probability), which will now focus on probability. The length is reduced from four hours to three.
- Exam MF (Mathematics of Finance) covers that topic from Course 2 in a two hour exam. An alternative text (Mathematics of Investment and Credit, 2nd ed., by S. Broverman) has been added to the syllabus.
- Minor adjustments have been made to the syllabus and reading for Exams M (Actuarial Models) and C (Construction and Evaluation of Actuarial Models), which replace Courses 3 and 4.
The official syllabus for the May 2005 preliminary exams is expected to be available in late fall of this year.
A new concept is Validation by Educational Experience (VEE) for the subjects of Economics, Corporate Finance and Applied Statistics. Guidelines and process for applying for VEE credit was announced in August. Once a particular course from a given institution has been approved, it was posted and candidates need only provide proof that the required grade has been earned in order to receive credit. In order to reduce the administrative burden, candidates must have passed at least two exams prior to applying for these credits. However, the experiences themselves could have been completed prior to passing the exams. In addition, an application process will be defined for candidates whose coursework is not on the initial approved list.
Fundamentals of Actuarial Practice
The Fundamentals of Actuarial Practice (FAP) course is currently in development. It is being designed as a bridge between the more theoretical material covered in preliminary education and the practical, practice-area specific material required for Fellowship. Candidates will be able to begin the FAP in January 2006.
The FAP will be a Web-based course set in the context of a problem-solving framework called the control cycle. Candidates will learn about the business environment, be exposed to situations and tools that are important and common for all ASAs and gain knowledge of various areas of practice through the use of examples and exercises.
The course will include eight interactive modules:
- The Role of the Actuary
- External Forces
- Common Actuarial Problems
- Solutions to Selected Actuarial Problems
- Design and Pricing of an Actuarial Solution
- Selection of an Actuarial Design and Model
- Selection of Initial Assumptions
- Monitoring Experience: Model and Assumptions
Each module will include an end-of-module exercise, or series of smaller exercises. This work will provide candidates the opportunity to apply the knowledge and skills acquired through the module. Candidates will submit each end-of-module exercise to the SOA for review and validation.
In addition to completing the eight modules, candidates will need to pass two FAP examinations (the first after completing Modules 1-5, the second after completing Modules 6-8).
>Associateship will be earned upon completion of preliminary education, the FAP course and examinations and the Associateship Professionalism Course (APC).
Fellowship Requirements
The purpose of the Fellowship requirements is to provide an experience that includes practical, practice-specific material through both a traditional examination setting and several interactive modules. Attainment of Fellowship will require the successful completion of two examinations and several interactive modules in the candidate's chosen practice area, plus the Fellowship Admissions Course (FAC). The practice areas are investment, finance, enterprise risk management, group and health, individual life and annuity and retirement.
Practice Area Work Groups have been busy developing learning outcomes for the examinations and modules. The examinations are each expected to be six hours in length, with portions of the retirement systems examinations to be satisfied by the Enrolled Actuary Examinations for U.S. candidates. We expect that there will be four to six interactive modules, and that each will take between thirty and fifty hours to complete, including readings, exercises and projects.
In particular, the final module may include a comprehensive project, that will complete the control cycle theme of the syllabus.
Comments and questions can be sent to eq2005@soa.org.
Stuart Klugman, FSA, Ph.D. is the Principal Financial Group professor of actuarial science at Drake University. He served as SOA vice president from 2001-2003 and currently chairs the Preliminary Education Task Force.