By Rick Gorvett
Anyone who has been involved with either the SOA or the CAS for even just five or ten years has almost certainly observed, and perhaps been personally affected by, a change in the actuarial exam structure. Indeed, exam transition rules may be one of the most frequently accessed sections of our two societies’ websites. While exam changes often invoke negative reactions (especially by students and candidates in the midst of pursuing a designation), they are generally the result of a positive and admirable intention: the desire to reflect in our educational curriculum the emerging and anticipated changes in the skills needed by actuaries. Two new CAS exams, being introduced in 2018, are examples of this type of adjustment: making basic actuarial education more relevant for the actuary of the future.
What Precipitated These Changes?
A couple of years ago, the SOA notified the CAS that it would be discontinuing Exam C (which most candidates use to get credit, via waiver, for the CAS Exam 4 requirement) after spring 2018, and replacing it as part of a broader set of changes to its exams and curriculum. The CAS chose to use this development as an opportunity to review our entire exam syllabus, especially with respect to those topics related to statistics and analytics. In particular, we spent months considering and updating the subject matter currently on CAS Exams 4/C and S.
What are the Changes?
What resulted from these deliberations was a pair of new CAS exams, titled Modern Actuarial Statistics I & II (MAS-I & MAS-II). While it’s not a precise mapping, one can generally think of Exam MAS-I replacing Exam S, and MAS-II replacing Exam 4/C. Current versions of the full syllabi are posted on the CAS website, at here and here. Briefly, the general topics included on these two exams are:
- Probability Models(stochastic processes and survival models)
- Statistics(parameter estimation, hypothesis testing, and statistical distributions)
- Extended Linear Models(understanding, development, evaluation, and interpretation of OLS, GLM, and other linear models)
- Time Series with Constant Variance(analysis and forecasting using AR, MA, and ARIMA models)
- Introduction to Credibility(limited fluctuation, Bühlmann, and Bayesian approaches to credibility)
- Linear Mixed Models(understanding, selection, and interpretation of linear mixed models)
- Bayesian Analysis and Markov Chain Monte Carlo (understanding, selection, and interpretation of Bayesian MCMC models)
- Statistical Learning(supervised and unsupervised techniques)
Taken together, these topics have been selected to address the emerging subject matter needs of future actuaries and their employers, and to increase the relevance of the CAS exam syllabus with respect to statistical and analytics skills. The desirability of these topics on the CAS exam syllabus was vetted through surveys and through discussions with employers of actuaries.
Exam MAS-I is similar to current Exam S, although the new exam has additional emphasis on applied modeling and deeper coverage of generalized linear models. MAS-I will first be offered in the spring of 2018, and there’s a very simple transition rule: those candidates with credit for Exam S will be given credit for Exam MAS-I.
New Exam MAS-II includes some material from Exam 4/C, along with much statistics and predictive analytics material. This exam will first be offered in the fall of 2018, and although there is additional material, we have kept the transition rule simple: having credit for Exam 4/C will give a candidate credit for Exam MAS-II. And although MAS-I is not a formal prerequisite for MAS-II, the latter exam will assume familiarity with the material on MAS-I.
Each of these exams will be a four-hour test, so there will be virtually no net increase in exam hours required for CAS credentials. They will each be offered every six months (in the normal spring/fall CAS timeframe), and will have a multiple-choice format, and sample questions will be available before the first offerings. Initially, these exams will be given as paper-and-pencil exams—although, in line with one of our strategic goals, we will consider evolving to a computer-based framework as the exams mature.
New CAS Credentialing Requirements
The impact of these new exams on achieving a CAS Associateship designation will basically be to simply replace two disappearing exams with two new exams. The ACAS designation will still require two VEEs (Economics, and Accounting & Corporate Finance, both of which are required by the SOA and will be recognized by the CAS), two online courses, and a professionalism course, in addition to passing seven exams. The difference in the exam requirements can be clearly and quickly described:
- Current ACAS Exam Requirements:
- Four preliminary exams: 1/P, 2/FM, 3F/MFE, and 4/C.
- Three associateship exams: S, 5, and 6.
- New ACAS Exam Requirements (2018):
- Three preliminary exams: 1/P, 2/FM, and 3F/IFM (the modified version of Exam MFE, being introduced by the SOA in 2018).
- Four associateship exams: MAS-I, MAS-II, 5, and 6.
Advice for Students and Faculty
The impact of our basic education structure on actuarial students and faculty is a hugely important factor to us at the CAS, and has been a consideration throughout the process of developing these new exams. Although there’s often a tendency to dread exam changes, I suggest, based on my experience from over a decade as director of the actuarial science program at the University of Illinois, students and faculty should consider and keep in mind the following:
First, the CAS has a duty to its constituents and stakeholders, as well as to the entire actuarial profession, to help ensure the preparedness of future actuaries for the challenges they are likely to face. The new MAS exams represent our attempt to provide education that’s uniquely relevant to future property-casualty actuaries and their employers, particularly in the area of emerging statistics and analytics skills.
Second, we have developed exams that are more relevant and beneficial to students and candidates, and we have done so with virtually no net increase in exam hours required for CAS credentials.
Finally, I truly believe that students will not be disadvantaged by these changes. Only about one in ten university actuarial science students takes more than three professional exams while in school; for those top students that do take more than three, they are likely to have already had internships and perhaps a full-time job opportunity in a specific practice area, and thus may know which direction (e.g., life, health, property-casualty) their careers are likely to follow. Even if one does take an exam that ultimately ends up be off their selected track, it should not be a problem: no one will be disadvantaged in the recruitment process by taking an exam that ends up not “counting” toward their chosen credential. Furthermore, exposure to any good mathematical or actuarial material is a positive experience.
The CAS will continue to accept SOA Exams P, FM, and IFM (modified MFE exam) for our preliminary exam requirements. So while there will be one fewer exam credit available via waiver from an SOA exam, the vast majority of candidates choosing the CAS route will already be employed and on their exam track at the point that they are sitting for their fourth exam.
In my view, these exam changes will ultimately be good for everyone, and they will enhance quality and relevance of the CAS’s actuarial education system!
Rick Gorvett, FCAS, MAAA, CERA, FRM, ARM, PhD, is staff actuary at the Casualty Actuarial Society. He can be reached at email@example.com.