Why VEE May Have an Adverse Effect on the Fellowship Credential
Randall D. Holmberg

Many current CAS members may not have paid close attention when Validation by Educational Experience (VEE) was introduced as a means of certifying that candidates had mastered certain actuarial topics. Proponents argued that academic coursework was a better way to learn many actuarial subjects than self-study followed by a professional exam. I agree it is a better way to learn these topics. However, as implemented, VEE is a sadly deficient way to validate that a particular candidate is qualified to practice as an actuary.

The value of the FCAS credential is threatened by VEE as currently formulated. Any practicing actuary who wants his or her credential to continue to represent understanding of a fairly rigorous curriculum needs to pay attention. Under VEE, candidates can receive credit for mastery of certain topics without in fact having any real understanding of them. If VEE grows to encompass more of the syllabus, we will have a proliferation of Fellows who do not possess adequate actuarial expertise. That will affect all practicing actuaries adversely.

I am not quibbling with the VEE credit for CFA exams or similar certifying exams. The issue is with academic coursework and other educational offerings for which a candidate can receive credit. Under VEE, an actuarial candidate can obtain credit for certain topics (currently finance, economics, and applied statistics) by completing a certified course with an acceptably high grade. The actuarial societies maintain a list of the courses they have certified for each topic. The CAS and SOA are trying to have it both ways with VEE. They do not directly take responsibility for teaching candidates or for testing their mastery of the material, but they set a specific list of material that must be covered for a course to qualify for credit, and then vet courses against this list.

The list of approved courses runs over 200 pages as of this writing, and covers institutions across the U.S., Canada, and the U.K. As a practical matter, the actuarial societies can have no meaningful oversight on such a broad collection of courses. The syllabus for each class is compared to the CAS/SOA requirements, and a class that covers all the topics is approved. That appears to be the end of the process. Whether a class is effectively taught, or instead is just a place and time where a group of people may congregate to chat, is unknown. Whether the exams for the course rigorously test the material the CAS demands on the syllabus is unknown. And whether there are any effective measures taken to discourage cheating is unknown.

...as implemented, VEE is a sadly deficient way to validate that a particular candidate is qualified to practice as an actuary.

Even at the most respected universities there are classes that students know to take in order to get an easy A. In most cases reading the course syllabus does not identify these classes. If the CAS/SOA list of approved VEE courses does not yet include classes of this sort, it certainly will eventually. That is because it is an impossible task for the actuarial societies to truly assure that the classes teach and test the material they claim in their course description when the list of classes they must verify is 200 pages long.

Casualty actuaries who worry about adverse selection and jurisdiction shopping in tort law surely do not have to be convinced that human nature is to game any system. There will be institutions that will establish easy courses that teach very little but appear to satisfy the actuarial societies' requirements, because they will be able to attract students and charge tuition for these courses. There will be students who will take these courses because it is easier than taking a rigorous course or passing a demanding exam. The path of least resistance is attractive to many, especially if there is money at the end of that path. Our professional societies must assure that actuarial credentials are only granted to those who have demonstrated an adequate level of proficiency in those fields of knowledge that have been deemed essential for actuaries. VEE as currently structured does not do that. It invites attempts to receive credit with the least amount of effort and learning possible. Given the sheer volume of the approved course offerings, the actuarial societies have no realistic chance of assuring that those receiving VEE credit actually know something about the topic they are receiving credit for.

Some current VEE options have publicly claimed that 95 percent of students receive credit from the CAS and SOA. This should raise doubts as to whether these courses are sufficiently rigorous. These are challenging subjects, and no meaningful course in them should give 95 percent of students a B- grade or better. Practicing members of the CAS need to inform themselves on VEE and make their voices heard among those who are running our admissions system. It will be harmful to all of us if the FCAS credential loses the respect that we and our predecessors have worked to accumulate over the past ninety-plus years.