iaa and the education of...

IAA and the EDUCATION of

ACTUARIES

Chris Daykin, Chief Executive, IAA Fund

Second African Congress of Actuaries

Nairobi, 3-4 November 2011

Training the actuaries of the future for a global profession

INTERNATIONAL ACTUARIAL ASSOCIATION (IAA)

Core Syllabus and Guidelines

> IAA has adopted core syllabus and guidelines…

> …as a requirement for Full Member status

> all associations applying are tested against requirement

> …to become Full Member Associations of the IAA

> Full Member Associations may require more but not less!

> revised syllabus approved by IAA Council in April 2007

> http://www.actuaries.org/ABOUT/Documents/Education_Guidelines_EN.pdf

> http://www.actuaries.org/ABOUT/Documents/Education_Syllabus_EN.pdf

http://www.actuaries.org/ABOUT/Documents/Education_Guidelines_EN.pdf

http://www.actuaries.org/ABOUT/Documents/Education_Syllabus_EN.pdf

IAA CORE SYLLABUS

Ten subject areas

> financial mathematics

> probability and mathematical statistics

> economics

> accounting

> modelling

> statistical methods

> actuarial mathematics

> investment and asset analysis

> actuarial risk management

> professionalism

IAA CORE SYLLABUS

Principal changes in April 2007

> financial mathematics (updated and modernised)

> probability and mathematical statistics (no change)

> economics (no change)

> accounting (no change)

> modelling (expanded)

> statistical methods (expanded)

> actuarial mathematics (completely rewritten and expanded)

> investment and asset analysis (expanded and new title)

> actuarial risk management (rewritten and new title)

> professionalism (greatly expanded)

IAA CORE SYLLABUS


> financial mathematics (updated and modernised)

> deterministic theory of interest rates

> generalised cash-flow models

> introduction to contingent claims analysis

> term structure of interest models

> risk neutral valuation

> stochastic calculus of finance

> stochastic theory of interest

> dynamic portfolio management

> introductory applications to insurance and financial liabilities

IAA CORE SYLLABUS


> actuarial mathematics (completely rewritten and expanded)

> nature of events giving rise to a contingency

> typical solutions offered by insurance, social insurance, etc

> actuarial methods for evaluating the prospective cost of solutions

> actuarial methods for monitoring the results and maintaining

financial stability, such as:

> reserving

> financial reporting

> reinsuring

> profitability analysis

> financial condition analysis

IAA CORE SYLLABUS


> actuarial risk management (rewritten and new title)

> risk types and risk measures

> management of risks and methods of reducing exposure

> monitoring the experience and exposure to risk

> management of the relationships between assets and liabilities

> profitability of the enterprise and management of capital

> principles of regulation of financial institutions

IAA CORE SYLLABUS


> professionalism (greatly expanded)

> characteristics and standards of a profession, including need for:

> specialised skill and education

> ongoing training and development

> high quality of advice

> exercise of independent judgement

> objectivity, integrity and accountability

> code of conduct

> discipline process

> practice standards set by actuarial bodies or other stakeholders

> regulatory roles of actuaries

> the professional role of the actuary


Core Syllabus and Guidelines – changes in 2012

> Education Committee will submit revised syllabus and guidelines to IAA Council in May 2012

> main change to guidelines:

> …encouragement to provide training in communication skills

> …both oral and written communication

> the only recommended change to syllabus is:

> …introduction of financial economics


Financial Economics added to Subject 3 Economics

> expected utility theory

> Efficient Markets Hypothesis

> asset return models and asset pricing models

> behavioural finance: prospect theory, investor heuristics and biases

INTERNATIONAL ACTUARIAL EDUCATION

Actuarial Examining Bodies

> Institute and Faculty of Actuaries (UK based)

> Society of Actuaries (North America based)

> Casualty Actuarial Society (general insurance – US based)

> Actuarial Society of South Africa

> Institute of Actuaries of Australia

> Institute of Actuaries of India

> Institute of Actuaries of Japan

> China Actuarial Association


Alternative approaches

> professional examinations

> university education

> university education plus some professional exams

> professional examinations with university accreditation

> university education plus work experience plus thesis

> government-sponsored actuarial examinations

> recognition of qualifications obtained elsewhere


International convergence based on IAA syllabus

> strong convergence on Core Technical (subjects 1 to 7)

> Joint Education Forum assists with coordination

> …for anglophone examining bodies

> variations in investment and finance content

> different approaches to Actuarial Risk Management

> need to strengthen professionalism education identified


Risk Management designations

> qualified actuary (e.g. FIA, AIA, FSA, ASA, FASSA)

> Chartered Enterprise Risk Actuary

> treaty signed by 14 founding associations

> …including UKAP, SoA, CAS, ASSA, IAAust, IAI

> accreditation of treaty signatories to award CERA

> intensive checking of compliance with syllabus

> I&FA’s ST9 being used by several associations

> …not just in English

INSTITUTE AND FACULTY BASIC EDUCATION

Developments in I&FA actuarial education

> Actuarial Risk Management replaced old CA1

> two-day assessment for communications (CA3)

> work-based skills replaced experience requirement

> Associates can call themselves actuaries

> ST7 and ST8 replaced old ST3 (general insurance)

> ST9 in Enterprise Risk Management

> CERA designation with most CTs, CAs and ST9

> experienced practitioner pathway for CERA

> online versions of CT9, CA2 and CA3

SOCIETY OF ACTUARIES BASIC EDUCATION

Developments in SoA actuarial education

> Decision-making and Communication (DMAC) module

> Financial Economics now multiple choice CBT

> trialling online test in Contingencies

> Centres of Excellence awards for universities

> sittings twice a year for Fellowship subjects

> changes to Advanced Finance and ERM in July 2012

> smoother pathway for gaining the CERA credential

Continuing Professional Development

Formally defined by the IAA as:

The development of knowledge and of technical, personal,

professional, business and management skills and

competencies throughout a person’s working life.

CPD guidelines approved by IAA Council on 2 October 2011


CPD and the individual actuary

CPD is an important element of the actuary’s lifelong

process of learning and development within the profession.

The initial qualification process is the first step in this

journey. Thereafter, it is the responsibility of all actuaries to

plan their own professional development program.


CPD and the actuarial association

All actuarial associations are encouraged to develop and

implement a CPD strategy that supports the objectives

outlined in section 1.2. Such a strategy should encourage

or require actuaries to carry out CPD in order to maintain

their competence, foster high quality in actuarial work and

promote the reputation of the actuarial profession.

Categories of actuary in I&FA CPD Scheme

Now only two categories:

Category 1 – requiring UK practising certificates

Category 2 – members in paid work

CPD – Category 1

Requiring practising certificate

No fewer than 30 hours of verifiable activities, of which:

At least 20 hours should be technically relevant to the subject

area of the PC, and at least 10 hours of that should be external

At least 6 hours must relate to professional skills

Up to 15 hours can be for “service to the Profession”

All PC holders are required to attend a Professionalism

Event

Reporting year runs from date of last PC renewal

Verifiable – member must be able to provide written

evidence of participation if requested

CPD - Category 2

Members in paid work

Mixture of events (at least five hours) and private study e.g.

Members must decide appropriate mix

Under events, members may count up to eight hours of

“service to the Profession” relevant to work area

Must attend professionalism event every 10 years

All must be “verifiable”, at least one event to be external

CPD year is from 1 July to 30 June

Hours at events Hours’ private

study

Total

15 0 15

10 5 15

9 7 16

5 15 20

CPD - Category 2

…. and there’s more

Exemptions will apply if members can show that:

Actuarial training, experience and membership does not contribute

to paid work

>For example, purely manual labour or performing arts

They have less than 20 hours’ paid employment annually

Serious ill-health prevents compliance

Members abroad fully regulated by Profession may comply

with local IAA-recognised CPD scheme

Partially regulated members comply with CPD scheme of

association by which they are regulated

CPD Scheme of the Institute and Faculty of Actuaries

Events

Any training or development involving interaction with others

Examples

Attending sessional meetings, conferences, seminars

Attending public, formal events

Webinars or interactive web-based learning

Delivering learning to colleagues

CPD Scheme of the Institute and Faculty of Actuaries

Professionalism Skills

Skills which are required whatever your role

Knowledge of Actuaries’ Code

Skills to ensure satisfactory outcome to boss/client

Examples include business skills, management, staff

development and IT

No longer a specific requirement for Category 2

(member decides)

INTERNATIONAL ACTUARIAL EDUCATION PROGRAMME

IAA plans for international actuarial education

> dropped idea of International Actuarial Education Programme

> leverage existing education systems

> support initiatives where external funding is available

> formation of Actuarial Educators Network

IAA EDUCATION

Options for English-speaking Africa

> accreditation of universities

> …by ASSA or I&FA (or both)

> I&FA examinations (with discounts where appropriate)

> link-ups between universities

> volunteer mentoring visits

> development of on-line tuition tools

IAA EDUCATION

Options for French-speaking Africa

> support from universities in France/Belgium/Lausanne

> university cooperation projects as in Senegal

> I&FA or SoA examinations in English

> volunteer mentoring visits

> development of on-line tuition tools

IAA EDUCATION

Longer-term options to develop

> support from African Development Bank

> other financial support

> enabling more substantive assistance programme

> perhaps in a few regional centres

IAA and the EDUCATION of

ACTUARIES

Chris Daykin, Chief Executive, IAA Fund

Second African Congress of Actuaries

Nairobi, 3-4 November 2011

Training the actuaries of the future for a global profession