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Requirements for ACAS to Issue NAIC PC Opinions Clarified for the 2011 CAS Syllabus
By Mary Frances Miller and David Menning 

The CAS Board recently approved changes to the CAS Syllabus that will be effective in 2011. It is important that candidates be aware of the fact that the exam requirements for ACAS will not cover all of the basic education requirements for actuaries issuing statements of actuarial opinion on loss and loss expense reserves in compliance with the Property and Casualty Annual Statement Instructions, which are issued by the National Association of Insurance Commissioners (NAIC PC Opinions). This article is intended to clarify the interaction among the regulatory requirements for appointed actuaries issuing NAIC PC Opinions, the U.S. Qualification Standards, and the admissions requirements of the CAS.   

The regulatory requirements are set out in the Annual Statement Instructions. Per the instructions, a “qualified actuary” is a person who is   

  1. A member in good standing of the Casualty Actuarial Society, or   
  2. A member in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries.1
   

It’s clear, then, that the regulatory requirement is met by all members of the CAS. However, while membership in the CAS may meet the NAIC Annual Statement instructions, being a CAS member is necessary, but not sufficient to qualify an actuary to sign NAIC PC Opinions. CAS members who wish to sign NAIC PC Opinions are subject to both the regulatory requirements and the U.S. Qualification Standards. Precept 2 of the Code of Professional Conduct requires that members be qualified and meet applicable qualification standards, and the Academy is the Recognized Actuarial Organization that issues such standards for the United States.   

The U.S. Qualification Standards require the actuary to meet both the general qualification standard for all statements of actuarial opinion and the specific qualification standard for NAIC PC Opinions. The actuary must meet requirements in three areas: basic education, experience, and continuing education. It is also important to note that the basic education and experience requirements need to be met only once.   

Basic Education   

All CAS members by definition meet the basic education requirements under the general qualification standards. However, the actuary must meet the following additional education requirements under the specific qualification standard, either through successful completion of examinations or through alternative education.   

Successful Completion of Examinations   

The actuary should pass relevant examinations offered by either the CAS or the Academy on the following topics (The Academy does not currently offer examinations, so the CAS exams are the requirement.):   

  • policy forms and coverages   
  • underwriting and marketing   
  • principles of ratemaking   
  • statutory insurance accounting and expense analysis   
  • premium, loss, and expense reserves   
  • reinsurance

Under the 2009 and 2011 syllabuses, these required topics are covered by the following examinations:
2009 and 2011 syllabuses required topics
   

Under the 2009 CAS Syllabus, most actuaries who meet the exam requirements for ACAS under the current syllabus will meet the basic education requirements for the NAIC PC Opinion. The possible exception is an actuary who took Exam 7-Canada. Although this exam includes material related to U.S. law and regulation, its coverage is not at the same level of depth as the U.S. exam. The Specific Qualification Standards do not explicitly state that the actuary must have passed the U.S. version of the examination. The fact that there are different nation-specific versions of the exam, however, would imply that the expectation is that the “relevant” exam is the U.S. version. Actuaries who chose to take Exam 7-Canada, then, would be advised to ensure that they have mastered all of the topics on the U.S. version of the exam through alternative education (as discussed below).   

Actuaries who attained membership in the CAS under prior syllabus requirements are advised to ensure that all of the required topics were covered. Any missing topics should be mastered either by passing additional CAS examinations or through alternative education (as discussed below).   

Beginning in 2011, the CAS syllabus has minimum exam requirements for ACAS that will not cover all of the basic education requirements for the NAIC PC Opinion under Section 3.1.1. of the U.S. Qualification Standards. In order to meet the specific qualification standard for NAIC PC Opinions, an ACAS will need to either pass the Advanced Reserving, Reinsurance, and ERM Exam or cover the reinsurance topic at the same level of mastery through alternative education (as discussed below).   

Alternative Education   

There is an alternative education option for an actuary who has not passed all of the relevant CAS exams. The requirement may be met through self-study and work experience, but requires a signoff by an actuary who is qualified to sign an NAIC PC Opinion. Obtaining such a signoff is intended to be specific to the knowledge and understanding about the required topic(s) on the exam(s) that the ACAS has not passed. A sample attestation statement is provided as an appendix to the qualification standard. While the alternative education option may be appropriate to fill in the gaps for CAS members who passed Exam 7-Canada, this option would not be appropriate in most cases to fulfill the required reinsurance topic for someone who has met only the minimum exam requirements for an ACAS under the 2011 syllabus.   

Experience   

The actuary must obtain at least three years of relevant responsible experience under review by an actuary who was qualified to issue NAIC PC Opinions. The experience does not need to be recent, but it should be relevant. This requirement has not changed. The reviewer does not need to be the actuary’s supervisor, and it is not necessary that the two actuaries have the same employer, for example, in cases where the reviewer serves as a consultant to the actuary’s employer. It is expected that the relevant experience would include a significant amount of reserving. For example, an actuary whose experience was restricted to ratemaking assignments would most likely not meet the experience requirement.   

Continuing Education   

The actuary must meet the continuing education requirement in the general qualification standard. As a part of the actuary’s continuing education, the specific qualification standard requires 15 hours of continuing education that must be directly relevant to the specific basic education topics discussed above, and that six of those 15 hours be obtained through activities involving interactions with outside actuaries or other professionals. The total number of hours (30) is not changed.   

Mary Frances Miller, FCAS, MAAA, is a member of the Casualty Practice Council of the American Academy of Actuaries. David Menning, FCAS, MAAA, currently serves as the CAS Vice President-Admissions.   

Disclaimer: The American Academy of Actuaries Casualty Practice Council believes this article accurately reflects the interaction between the CAS syllabus and the U.S. Qualification Standard. However, an individual actuary must review the Qualification Standard and determine whether or not the actuary is qualified to issue the NAIC PC Opinion.

1 State authorities have also approved others to act as appointed actuaries, although this has become increasingly rare as the supply of qualified actuaries has grown.

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