December 2016

ASA Curriculum Changes and the General Insurance Track

By Stuart Klugman

By now you are likely aware that the Society of Actuaries Board of Directors approved major changes in the ASA requirements, effective July 1, 2018. The full rationale for the change, structure of the new requirements, transition rules, and other information can be found at the dedicated web page. In this article I want to concentrate on the likely implications of these changes for candidates taking the General Insurance track to fellowship.

It is important to note that any changes to the fellowship exams and modules will occur sometime after the July 1, 2018 implementation of the new ASA curriculum. That will allow candidates to actually complete the new exams rather than receive transition credit for them.

Predictive analytics

Currently, GI candidates encounter analytics at two points. The first is the Applied Statistics Validation by Educational Experience (VEE) requirement, which covers ordinary regression and time series. The second is the Applications of Statistical Techniques (AST) Module, which covers the generalized linear model (GLM) and applications to classification ratemaking and reserve variability, along with an introduction to cluster analysis and linear mixed models.

With the revisions, the applied statistics subject will move from VEE to an exam and will add an introduction to the GLM. It will be followed by a new exam on predictive analytics. While the exact topic list is not yet set (look for an announcement in early 2017), it will definitely include advanced GLM topics and clustering methods. The topics will be illustrated with actuarial applications, but with an understanding that the candidates have received limited track-specific education.

As a consequence, much of the material in the AST module will now be covered at the ASA level. This will allow the module to be reconfigured to go directly to GI applications of the methods covered in the ASA material as well as introduce additional methods.

Balance between long term and short term coverages

A second major change is to increase the coverage of pricing and reserving of short-term products such as health and GI. This will be basic material, covering straightforward applications of the pure premium and loss ratio methods along with the development method of estimating unpaid claims. This material is currently covered in the Fundamentals of Actuarial Practice Course, but now will be formally tested on the Short Term Actuarial Mathematics Exam (the successor to Exam C).

The obvious question is what this means for the Introduction to Ratemaking and Reserving Exam for fellowship on the GI track. The short answer is, not much. It is unlikely that the readings will change. What may change is that the most basic versions of these methods will not be tested on the exam. However, that is currently a small part of the exam. Our GI fellows must demonstrate a high level of ability with these topics and that will continue to be the focus of this exam.

Final thoughts

As with most transitions, the best strategy is to continue to make progress under the current requirements. The implementation dates, transition rules, and contents of any fellowship revisions will be announced at least one year in advance, allowing sufficient time for candidates to plan their next steps.

Stuart Klugman, FSA, CERA, Ph.D., is a senior staff fellow for the Society of Actuaries. He can be contacted at sklugman@soa.org.