What Is an Actuary?

by Victoria Stachowski (with Alice Underwood)

I was sitting in a gathering of American and European actuaries when the invited speaker, a European, said something like, "Of course, American actuaries aren't very good at math." At this the American part of the audience-some of them with doctoral degrees in mathematics-bristled visibly. I wondered why we had invited a speaker who would deliberately insult us.

There's a certain amount of tension between different countries' actuarial societies, with a little extra resentment aimed at the CAS. As the CAS has generally not recognized the qualifications of actuaries trained in other countries, other actuarial institutions want to return the snub. Europeans sometimes do this by asserting that the math on the CAS Syllabus is inadequate compared to the mathematical training required by actuarial professions in Europe. (I'm simply presenting this opinion, not necessarily agreeing with it.)

One way for the CAS to gain greater acceptance abroad would be to give more acknowledgment of other actuarial institutions. I can understand the CAS policy of not granting Fellowship or even Associateship to members of other actuarial societies-after all, other actuarial institutions have not been focused in depth on property-casualty insurance, but rather on a combination of life, nonlife, and pensions. Further, the U.S. and Canadian regulatory systems, and their attendant requirements, are different from those found in other countries. I was greatly relieved by the creation of the Affiliate status, which has provided a special membership class for those accredited in other societies.

But in order to appreciate the training required by other actuarial institutions, we need to know what it is. Training in other countries may involve university study, on-the-job experience, a series of exams, or a combination of these. To give a brief sampling, here's a very incomplete description of a few of the European programs:

(1) Germany. Candidates must have majored in mathematics or a related field. Then they take five exams: pension, general (nonlife), life, information systems, and one of either health insurance, Bausparmathematik (mathematics for the special program of saving for real estate), or finance. The candidates also have to write a sixth, more in-depth, exam in one of these areas, which would then be their specialty.

This program is administered by the DAV (Deutsche Aktuarsvereinigung, i.e. German Actuarial Society). The exams are a little different from ours. Each lasts only 90 minutes, and they are not graded on a curve. But my colleagues assure me they are quite challenging!

(2) France. Since 1997 there has been only one professional organization, the FFA (F‚d‚ration Française des Actuaires). But as this involves the merger of four disparate societies, there are still multiple channels for becoming an actuary in France. Most of the former institutes required a university degree in actuarial science, special university-level actuarial courses, and often some practical work. Now that there is a unified society, the FFA is working to harmonize their approaches.

(3) Italy. Italian actuaries also receive their training through university. Until recently there were only two universities that supplied this training, but that is changing. The studies usually take 5 years to complete, because the students need to pass a total of 25 exams, many with both written and oral components. Finally, there is a "Tesi," a discussion of all the coursework with the professors, and a single examination given by the state, "Esame di Stato."

(4) Sweden. There is no specific examination system. However, "actuarial competence" is important and is defined as a combination of mathematics and mathematical statistics in the academic education. Job training is not specifically required but in order to be accepted into the Swedish Actuarial Society you must be approved by a committee; most candidates have actuarial experience.

(5) Netherlands. In the Netherlands you have to be a member of the "Actuarieel Genootschap," or Actuarial Society. There are two ways to become a member. One is to complete a Master's degree in actuarial science at the university first (4 years) and then pass a couple of additional courses such as ethics, speaking and writing skills, and negotiation techniques.

The other longer way is to take courses through the "Actuarieel Instituut." The first step is the "Actuarieel Rekenaar" diploma, based on nine courses (1.5 years). The second is the "Actuarieel Analist" diploma, based on another 21 courses (3.5 years). The level of "Actuarieel Analist" is comparable to a Bachelor's degree. After this, 15 additional modules are required to reach the same level as people who attained accreditation via the Master's degree. Those modules are partly given at the university.

Both routes to certification require at least two years of actuarial work experience in a broad range of topics and a written thesis of about 60 pages. During the educational process, the candidate chooses a specialty from among four possibilities: life, nonlife, pensions and social insurance, and Actuarial Approach for Financial Risks (AFIR).

All of these methods have their pluses and minuses, as does the CAS system. And although the CAS may not give actuaries trained in these and other programs reciprocal Fellowship status, it's important-especially if you work abroad-to show respect for the work your foreign colleagues have done to attain their designations. And a better understanding of what kind of education your non-CAS colleagues have gone through helps you better argue in support of the value of the FCAS designation.