INTERNATIONAL DEVELOPMENTS IN ACTUARIAL

EDUCATIONChris Daykin

Chairman, Education CommitteeEuropean Actuarial Consultative Group

ROUTES TO ACTUARIAL EDUCATION

• exams offered by a professional body• university education• professional exams allowing for exemptions• university education + professional exams• university education + experience• post-graduate specialist programs

EUROPEAN ACTUARIAL CONSULTATIVE GROUP

• Consultative Group established in 1978• mutual recognition agreement in 1992• Education Committee established in 1992• core syllabus adopted in 1998• endorsement by member associations in 2001• implementation by 2005• further evolution planned

EDUCATIONAL APPROACH

Assn. runs own exams GR, I, LV, NL, UKUniv. + assn. exams CH, D, ES, LV, NLUniversities alone B, DK, E, F, I, P, SLUniv. credits for assn. exams CH, D, ES, NL, UK Other exams not accepted CA, D, E, IRL, HR, LV,

NL, P, SFGovt. has responsibility DK, F, GR, HR, I, SF, SLOther system CA,HR,IRL,LV,LT,S,SL

INTERNATIONAL ACTUARIAL ASSOCIATION (IAA)

• new constitution in June 1998• adoption of core syllabus and guidelines• applies for students starting from 2005 onwards• requirement for Full Member Associations• transitional arrangements permitted

PURPOSES OF GUIDELINES AND SYLLABUS

• to help establish new education systems• for reviewing existing education systems• to underpin bilateral mutual recognition• for accreditation as Full Members of IAA

NATURE OF GUIDELINES AND SYLLABUS

• not prescriptive for associations• leaves structure of actuarial education open• emphasis and packaging may differ• additional requirements permitted• overall balance of depth and breadth• indicative reading provides guidance

IAA CORE SYLLABUS - 1

• financial mathematics• probability and mathematical statistics• economics• accounting• modelling• statistical methods

IAA CORE SYLLABUS - 2

• actuarial mathematics * life insurance * general insurance * pensions * health care

• investment and asset management• principles of actuarial management• professionalism

IAA PROCESS

• still under discussion• self-certification the first step• audit by subcommittee of Education Committee• difficulty of defining depth• challenge of specialist qualifications

STRATEGIC REVIEWS

• IAA Syllabus and Guidelines (by 2005)• Groupe Consultatif Core Syllabus (by 2005)• Faculty and Institute of Actuaries (for 2005)• Society of Actuaries (with CAS) (for 2005)• Institute of Actuaries of Australia (Parts 2/3)• Joint Education Task Force 2005

Genera

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CountrySpecific

Technical

Application

Pensions

GeneralInvestment

Fina

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Health

Banking

Busin

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Lead

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Life

Research

Analyst

Risk

Compl

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nician

Education

CapitalProjects

Generalist- Modern

Generalist

- Traditional

International

Soci

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Gov

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Applications

Core

Technical

Core

Pre-entryKnowledge

CORE TECHNICAL (F&IoA)

Financial MathematicsFinance and Financial ReportingProbability and Mathematical StatisticsModelsContingenciesStatistical MethodsEconomicsFinancial Economics+ Business Awareness Module (non-examined)

CORE APPLICATIONS

• broad education in actuarial applications• taught and assessed by real practical examples

and courses• exam on assets and investments• exam on liabilities and asset/liability issues• modelling course• communications paper

CORE APPLICATIONS (F&IoA)ACTUARIAL CONTROL CYCLE (IAAust)

ASSOCIATESHIP COURSE (SoA)PRINCIPLES OF ACTUARIAL MANAGEMENT (IAA)

• Stakeholders • General Environment• Investment and assets • Risk• Specifying the problem• Input validation• Developing the solution• Living with the solution• Monitoring/feedback • Professionalism

KEY ELEMENTS

• meeting the needs of clients/customers• awareness of risk• consistency through pricing, valuation, etc• measurement of value, profit and return• holistic approach• based on principles rather than practice area• examples from a wide range of applications

ASSOCIATESHIP (F&IoA)

Core Technical+ Core Applications+ Module 1 of Professionalism Course= Associate of Institute (or Faculty) of Actuaries

(AIA or AFA)

SPECIALIST AREAS

• Life insurance• General insurance• Pensions and other benefits• Finance & Investment• Health & Care• others under consideration, e.g. social security

and enterprise risk management

SPECIALIST LEVEL

• 2 specialist technical papers (ST)• 1 specialist application assessment in two parts • 1 or 2 STs may be in another speciality• dissertation as a possible alternative to one ST• other qualifications instead of one ST• structured work experience

WORK EXPERIENCE

• practical application of knowledge• development of professionalism• mentored experience• development of work-based competencies• maintenance of lifelong learning log-book• start of Continuing Professional Development

ASSOCIATESHIP (SoA)• Validated by educational experience

- Economics (E)- Corporate Finance (CF)- Applied Statistical Methods (AS)

• Validated by traditional actuarial examination- Probability (P)- Mathematics of Finance (MF)- Models for Quantifying Risk (M)- Construction and Evaluation of Risk Models (C)

• ASA Course – the Control Cycle

MUTUAL RECOGNITION• IAA process may facilitate mutual recognition…• … but at “Associateship” level• bilateral agreements most likely• exam for exam credit in professional systems• university based systems may also be recognised• generally a need also for work experience…• …and process for testing local knowledge• could the IAA sponsor international exam system?

CONTINUING PROFESSIONAL DEVELOPMENT (CPD)

• lifelong learning philosophy• need to maintain currency of knowledge• need for personal development and challenge• How formal does it need to be?• re-certification not yet on the agenda…• …but getting close in some countries

A&A – DIPLOMA PROGRAM• F&IoA programs in central & eastern Europe• preliminary actuarial education• not necessarily sufficient for IAA accreditation…• … but may be a good start• needs to lead on to full actuarial education process• Basic Diploma Program (1 year)• Advanced Diploma Program (1 year)• Dissertation and defence (6 months)

BASIC DIPLOMA PROGRAM

• Financial mathematics• Life insurance mathematics• Statistics and probability• Mathematics for non-life insurance• Economics and investment• Social security and private pension plans• Principles and practice of life insurance• Principles and practice of non-life insurance

ADVANCED DIPLOMA PROGRAM

• Demography• Advanced actuarial mathematics• Investment and asset/liability management• Actuarial management of life insurance• Actuarial management of non-life insurance• Actuarial management of health insurance• Principles of accounting in local environment• Principles of law in local environment

HOW TO MOVE FORWARD?

• introducing new university programs• upgrading existing education…• …for those already working in the industry• some introductory diploma programs needed?• …or perhaps structured program of CPD• looking for funding partners (FIRST?, USAID?)• need to develop process within IAA