By James E. Trimble
The E&R Section Council Members and some Friends of the Council (all former council members) recently held two conference calls that I want to tell you about. The first call was a discussion of the best way to educate new entrants to the actuarial profession. While many of us on the call passed the actuarial exams through self-study, we unanimously agreed that university education adds value. This does not mean that self-study is “bad,” nor does it mean that university educated actuaries are somehow “better” actuaries. Rather, we simply agreed that university education offers certain advantages in preparing new entrants to the actuarial profession.
As risk management and actuarial science are becoming increasingly complex, we agreed that students benefit from classroom discussion and experiences, such as the opportunity to build models and work in teams. Communication skills, such as writing actuarial reports tailored to different audiences can be better developed in a university setting, with feedback from faculty members, and opportunities to re-write reports. At many universities, students develop industry connections through actuarial clubs and speaker’s series events which feature actuaries with different backgrounds and experiences. Actuarial specific career fairs provide more opportunities to make these connections. Indeed, these connections often lead to internships. We all felt that students who benefit from the combination of university study and real world experience through internships are very well prepared when they accept their first full time actuarial positions. These are just a few of the advantages we discussed on the call. Elsewhere in this newsletter you will find other examples of some very good ways that universities are adding value in the education of future actuaries. I invite each of you to share your own experiences in future editions of this newsletter. I think an ongoing column sharing good ideas in actuarial education would be a nice addition to our newsletter.
The topic of our second call was the University Accreditation Program (UAP) that the Canadian Institute of Actuaries (CIA) Board approved in March, 2011. Rob Stapleford wrote an excellent article describing the UAP and the work that went into the development of the program that was published in the August/September 2012 issue of The Actuary. If you haven’t yet read it, I encourage you to do so. In that article, Rob states that “Beginning in September 2012, accredited universities will be able to offer courses which will provide students with the option of applying to the CIA to gain exemptions from writing the examinations.” The preliminary examinations for which exemptions may be granted are FM, MFE, MLC and C. Ten Canadian universities have been accredited by the CIA.
Rob also wrote “Many participants in the accreditation process identified that some form of recognition from our education partners is a key step in the long-term success of the UAP. Therefore, gaining recognition and acceptance from the SOA/CAS of CIA exemptions is a top priority for the CIA.”
The focus of our call was to discuss how we felt the SOA should work with the CIA with respect to recognition of credits earned by students at Canadian universities through the UAP. Virtually every entry level actuarial candidate in Canada is a graduate from an accredited actuarial program in a major university. We discussed how the path to Fellowship has evolved differently in Canada as compared to the United States. Several participants expressed the opinion that the Canadian UAP may not translate well to the United States. Nevertheless, in the interest of being global we all believe the SOA must recognize national differences, and should be open to alternative educational methods employed in different countries, provided they do not diminish the value of the SOA credentials. Indeed, the SOA already recognizes this by granting waivers for SOA examinations for credits granted by the U.K. and Australian actuarial organizations, provided those credits were acquired through accredited university programs.
The CIA appears to be implementing a robust system of oversight, similar to the U.K. and Australian processes. The Canadian UAP program only grants credits to top performing students in accredited actuarial programs in major Canadian universities. Rob’s article states that “The AC (accreditation committee) concluded that the expected number of students who will receive exemptions will likely be less than the proportion of students who pass the traditional examinations.” Some readers may be skeptical of that claim. My experience as a university professor over the last three years leaves me with little doubt that it is accurate. Over the three years that I have taught financial mathematics, 100 percent of the students who achieved an A or A- in my class passed exam FM shortly after finishing the course. Naturally, some students who earned a lower grade also passed the actuarial exam. So, hypothetically if the bar for exam waivers were set at a grade of A- or better in my class, the evidence strongly suggests that the percentage of students achieving the waiver would be less than the percentage of students who would pass the exam. Further, the evidence also suggests that the students granted the waiver would be deserving of the waiver.
I have discussed these results with faculty teaching actuarial courses at several other universities, including the University of Manitoba, Penn State University, and the University of Waterloo, to name just a few. All reported similar results for their courses. The CIA applied just this sort of analysis in order to set minimum exemption grades for each course in each university. Therefore, we believe that the risk of devaluing the SOA credential through recognition of CIA credits is extremely low. Furthermore, this risk would be monitored and controlled through SOA involvement in the accreditation process.
We also discussed the long-term special relationship that U.S. and Canadian actuaries have in the SOA. We believe that if the SOA Board chooses not to work with the CIA with respect to the Canadian UAP then it risks damaging that long-term special relationship and losing future Canadian members and volunteers over the long run. That would be a most unfortunate outcome. We believe that risk far outweighs any risk from recognizing the credits the CIA grants to students in Canadian universities through their UAP. This is especially true given the SOA strategic plan to be a more global organization.
At the conclusion of the call, we unanimously agreed that the SOA should recognize the waivers that the CIA grants for credit for preliminary examinations to students who earn them in Canadian universities under their University Accreditation Program, provided that the SOA has an active role in the oversight of the accreditation program. We also agreed to formally send this recommendation to the board. The full text of our recommendation is reprinted in this newsletter. I encourage each of you to read it, and to voice your opinions on our E&R linked-In group.
James E Trimble, MAAA, FSA, CERA is director of the Actuarial Science Program at the University of Connecticut and chairman of the Education and Research section council.