Exams in Real Life: Exam 6

by Rehan Siddique, ACAS

I have always felt that Exam 5 is the first uniquely actuarial exam, and Exam 6 is the exam that makes you finally feel like an actuary. When you pass Exam 6, you will find yourself vastly more knowledgeable on general P&C insurance regulations, history and financials, and insurance’s role in society. At our core, actuaries are meant to be the business professionals who can navigate the mathematical/business complexities of insurance to make it a feasible venture for consumers, producers and governments.

In this article I want to talk about parts of the Exam 6-US syllabus that I believe are relevant to actuaries today. It’s easy to start thinking how ridiculous the material is, especially as you are slogging through some wild formulas (looking at you, IRIS ratio 13), but I think it’s important to take a step back from the formulas and look at the bigger picture.


I love reading about history and can spend hours going down rabbit holes on Wikipedia. Luckily for me, that habit helped me study for this part of the exam. I know it can seem like this section of the exam is simply memorizing and regurgitating bullet points about congressional acts, but once you see how interconnected each of these moments are you will find it easier to discuss them. I doubt many actuaries are citing Supreme Court decisions and congressional acts in their daily work, but having an understanding around the motivations and results of these will give you an appreciation for the current regulatory climate.

Social Impact

As actuaries, we are beholden to more than just the company’s bottom line. We have our own set of standards and disciplinary boards that make the morality of our decisions a little less gray. When we do our work, it is important to understand the implications for the company as well as the policyholder. Telematics, wearable technologies and other buzzworthy innovations are all disrupting the insurance industry, and actuaries need to be able to adapt to these changes. It’s easy to see how insurers have the power to impact their policyholders’ behaviors with their pricing. This part of the exam isn’t intended to get you to memorize cause and effect for different scenarios; rather, it is meant to get you to start thinking in a more “actuarial” way. Most of the time, the exam graders will accept an answer if you can reasonably defend it.


Insurance regulators are responsible for safeguarding the interests of consumers. To that end, they will monitor the health of insurance companies and act when there is an increased likelihood that a company will go insolvent and be unable to meet its obligations to policyholders. There are many metrics someone can use to determine an insurer’s financial health, but a specific set of metrics are enforced by regulators. Formulas like the IRIS ratios (with their thresholds) and risk-based capital are useful for actuaries to monitor as well as necessary for regulatory compliance. Opining on reserve adequacy is the responsibility of a qualified actuary and also an integral part of regulatory oversight.

Financial Statements

I have only worked in consulting, but I have found myself reading through financial statements many times (even before I started studying for Exam 6). Knowing at least which statements contain the information you are looking for makes sifting through 1,000-page reports much easier. Schedule P and Schedule F are both extremely important for monitoring reserve adequacy and reinsurance dealings/provisions. Actuaries of other companies may look for these when performing competitor analyses. The balance sheet is another section that you may think should only be studied by CPAs. Actuaries who have a role in the reserve-setting process are very interested in the liabilities section due to reserves taking up a majority of those amounts. Those who work in setting the Schedule P reserves need to be aware of the necessary reporting requirements, such as restating things due to qualifying changes. An example of the importance of this section can be found in how certain auto insurers are refunding premiums due to COVID-19. As of now, we don’t know how these refunds will be recorded. A reduction in premium versus an expense will have dramatically different results on the insurer’s health, and it is important for actuaries to be able to balance the pros and cons for management.

This exam stuffs a lot of information into one syllabus, but the payoff is a candidate who has foundational knowledge on many different areas of insurance.