Proposed Foundational Statements Comments Due December 1
CAS members are being asked to consider an update to the CAS Statements of Principles. On September 20, a new exposure draft was provided for comment to CAS members. The exposure draft, approved for consideration by the CAS Board of Directors, addresses the CAS Statements of Principles. Titled, “Foundational Statements,” these statements address the work performed by casualty actuaries, the important aspects and characteristics of that work product and the environment in which those work products exist.
What are the Foundational Statements?
Currently, the CAS has Statements of Principles addressing Ratemaking, Loss Reserving, and Valuations. These Statements were put into place about 25 years ago to characterize and guide actuarial work products, focusing on the prevailing areas of practice at that time. They consisted of elements of conduct, standards of practice, and statements describing actuarial work. While there have been infrequent modifications to them over that time period, the circumstances that existed at their inception no longer exist and have, in fact, changed dramatically. Among those changes are:
- Establishment of standards of actuarial practice in the U.S. and other countries where CAS members practice.
- Adoption of Codes of Professional Conduct for CAS members.
- Progress in the development, geographic spread, and scope of actuarial practice, including establishment of the Standards of Practice by other actuarial organizations.
- Establishment of regulatory rules and regimes impacting actuarial work products.
The CAS Board recognized that, in light of those changes, the Statements of Principles should be reviewed, recommendations made and, as appropriate, a revised set of Statements be drafted for exposure to the membership.
What was done?
A task force of experienced actuaries addressed in considerable detail the substance of the existing statements, the existing Standards of Practice, and the change in scope of actuarial practice. A set of characteristics were formulated as a foundation for decisions and restatements and is part of the report in the exposure draft. The proposed statements were shaped through the fact gathering, detailed reviews, discussion, and feedback on preliminary drafts from members, actuaries outside of North America, and nonactuaries.
How are the Statements changing?
The name of the statements clearly changed to avoid confusion over the both the definitions and usage of the term “principles” that exist in professional practices. The proposed Foundational Statements:
- will more aptly describe the essential features and underlying factors in which CAS members practice and provide work products.
- will explicitly express the essential characteristics of “risk” that appear in all of our practice areas.
- will no longer have Standards of Practice in their wording to avoid conflict with other sources of governing standards.
- will not refer to a specific work product (such as reserving or ratemaking), which recognizes that there are overriding similarities across work products; in addition, they should be robust with respect to future changes to the scope of actuarial work.
- avoid duplicating statements made in other areas that govern both the underlying sciences on which actuarial work is built and regulatory requirements that govern practice and content.
- Preserve the essential concepts in the existing statements.
- The exposure draft report includes a table to highlight the disposition of those concepts.
What is the impact?
The essential concepts affecting members’ work products are maintained and still govern. These concepts may exist in the Foundational Statements themselves or in other venues, such as the ASOPs of the Actuarial Standards Board, as identified in the mapping in the report. The format has changed; however, members will still recognize the continuation of concepts contained within the existing statements.
It is important to note that upon adoption, the existing Statements of Principles will be replaced by these Foundational Statements.
These Statements were prepared for consideration by not only CAS members, but also to our publics, including those who both grant us the acceptance and credibility to practice our craft and who are the direct beneficiaries of our work.
The CAS Board is asking you to review the revised statements and is encouraging you to provide feedback. This exposure draft is on the CAS Web Siteand will be open for comment until December 1, 2010. Please send your comments to email@example.com.