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The Revised Qualification Standards and Continuing ...


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The Revised Qualification Standards and Continuing ...

  1. 1. Life 2009 Spring Meeting May 18-19, 2009 Session 62 Panel Discussion The Revised Qualification Standards and Continuing Professional Development Apply to You! Moderator Mike A. Boot, FSA, FCA, MAAA Authors Mike A. Boot, FSA, FCA, MAAA Thomas C. Griffin
  2. 2. U.S. Qualification Standards and New SOA CPD Requirements Apply to You PRESENTED TO Life Spring Meeting May 2009 Tom Griffin, Academy Senior Staff Attorney Mike Boot, SOA Managing Director Presenters Tom Griffin, Academy Senior Staff Attorney; and Michael Boot, Managing Director, Society of Actuaries 2 2 1
  3. 3. True or False? The US Qualification Standard applies to TRUE Academy members? The US Qualification Standard applies FALSE only to Academy members? As a member of a US based actuarial FALSE organization I must always comply with (but TRUE) the US Qualification Standard??? 3 3 Academy Mission The Academy’s mission is to serve the public on behalf of the United States actuarial profession. To accomplish this, the Academy: Provides independent and objective actuarial information, analysis, and education for the formation of sound public policy; Proactively identifies and addresses issues on behalf of the public in matters where actuarial science provides a unique understanding; Increases the public’s understanding and recognition of the value of the actuarial profession; 4 4 2
  4. 4. Academy Mission (continued) Facilitates and coordinates issues of common interest among the U.S.-based actuarial associations; Provides for the establishment, maintenance, and enforcement of high professional standards of actuarial qualification, practice, and conduct; and Coordinates the representation of the U.S. profession globally. 5 5 Committee on Qualifications The Academy’s Committee on Qualifications (COQ) is charged with promulgating, and revising, as necessary, the Qualification Standards. The COQ counsels actuaries on issues relating to qualifications and develops guidelines for the administration of the qualification standards. 6 6 3
  5. 5. Qualification Standards Precept 2 Perform professional services only when qualified to do so AND in compliance with applicable Qualification Standards: Know and follow applicable Qualification Standards, which, in U.S., are published by the Academy. Revised Qualification Standards became effective January 1, 2008. The absence of a Qualification Standard in your jurisdiction does not relieve you of the duty to comply. 7 7 Structure of Qualification Standards The revised Qualification Standards are set out as follows: Introduction (including important definitions) General Qualification Standard • Basic Education and Experience Requirements • Continuing Education Requirements Specific Qualification Standards (if applicable) Changes in Practice and Application (general and specific) Acknowledgement of Qualification Recordkeeping Requirements 8 8 4
  6. 6. Scope Expanded The prior Qualification Standards applied more restrictively to “Prescribed” Statements of Actuarial Opinion (PSAO). The revised Qualification Standards expand applicability of the Qualification Standards to all actuaries issuing Statements of Actuarial Opinion in the United States. The revised Qualification Standards (including CE requirements) do not apply to you if you do not issue Statements of Actuarial Opinion. 9 9 SAO Defined “Statement of Actuarial Opinion” is defined in the revised Qualification Standards as “an opinion expressed by the actuary in the course of performing Actuarial Services and intended by that actuary to be relied upon by the person or organization to which the opinion is addressed.” “Actuarial Services” are defined in the Code of Professional Conduct as “[p]rofessional services provided to a Principal (client or employer) by an individual acting in the capacity of an actuary. Such services include the rendering of advice, recommendations, findings, or opinions based upon actuarial considerations.” 10 10 5
  7. 7. SAO Defined (continued) Appendix 1 to the revised Qualification Standards sets forth various examples of what constitutes an SAO and what does not constitute an SAO. Section I(b) of Appendix 1 of the revised Qualification Standards states the following: • A draft of an actuarial opinion that has not been provided to an actuary’s Principal who requested the opinion is not an SAO. • A draft of an actuarial opinion that has been provided to an actuary’s Principal who requested the opinion is an SAO unless the document is clearly marked that it should not be relied upon. 11 11 SAO Defined (continued) • If there is a reasonable likelihood that the Principal will rely on the draft regardless of intent, that is an indication that the draft is an SAO. • If the Principal is not subsequently sent a final report within a reasonable time frame, that is an indication that the draft report is an SAO. The actuary should communicate to the Principal that the final report replaces the draft report. • There may be instances where the actuary sends the Principal a draft report that clearly indicates it should not be relied upon (a document that is not an SAO according to the above definition) and the actuary and Principal subsequently agree that a final report will not be issued. In this case, the draft report is not an SAO. 12 12 6
  8. 8. Basic Education and Experience Before issuing an SAO, an actuary must meet the following three criteria: Be a Member of the Academy, a Fellow or Associate of the SOA or the CAS, a Fellow of the CCA, a Member or Fellow of ASPPA, or a fully qualified member of another IAA-member organization; & Have three years of responsible actuarial experience, which is defined as work that requires knowledge and skill in solving actuarial problems; & Be knowledgeable, through examination or documented professional development, of the Law applicable to the statement of actuarial opinion. 13 13 Additional BEE For Specialty Tracks The standards also require the actuary to satisfy one of the 3 requirements below to issue SAOs in a practice area covered by SOA specialty tracks, or CAS or ASPPA exams: Attain the highest possible actuarial designation in an IAA full-member organization (other than the Academy) and complete a specialty track in the area of actuarial practice relevant to the subject of the SAO; or Attain the highest possible actuarial designation in an IAA full-member organization (other than the Academy) and have a minimum of one year of responsible actuarial experience in the area of actuarial practice relevant to the subject of the SAO under the review of an actuary who was qualified to issue the SAO at the time the review took place under standards in effect at that time; or 14 14 7
  9. 9. Additional BEE For Specialty Tracks (continued) Have a minimum of three years of responsible actuarial experience in the area of actuarial practice relevant to the subject of the SAO under the review of an actuary who was qualified to issue the SAO at the time the review took place under standards in effect at that time. 15 15 Additional BEE For Specialty Tracks (continued) Once an actuary is qualified to issue an SAO, the actuary’s basic education and experience requirement is met “forever”; future changes to these requirements do not apply retroactively. Consequently, people who were qualified under the pre-2008 standards for basic education and experience meet the basic education and experience requirements under the revised Qualification Standards (i.e. grandfather clause). 16 16 8
  10. 10. BEE and Enrolled Actuaries Qualified Enrolled Actuaries (EAs) are deemed to meet the basic education and experience requirement in the pension practice area only. 17 17 Three-Year Experience Requirement The revised Qualification Standards contain a new provision that requires “three years of responsible actuarial experience” to be deemed qualified. There may be situations where, for example, an ASA has not yet met the three-year experience requirement and may be preparing SAOs for another actuary in the organization. In these situations, it will be necessary for a qualified actuary to review the work of such actuary and take responsibility for that work. 18 18 9
  11. 11. Continuing Education 30 CE Hours – Actuaries subject to the revised Qualification Standards must complete and document at least 30 hours each calendar year of relevant CE. Organized Activity Requirement – At least six (6) hours must be from “Organized Activities.” Professionalism Requirement – At least three (3) hours must be on professionalism topics. Cap on General Business Courses - General business courses are limited to three (3) hours per year. 19 19 Continuing Education (continued) The CE requirement will typically be met in the calendar year preceding the year in which the actuary issues the SAO. If, however, an actuary fails to meet the CE requirement in the preceding year, the shortfall may be earned in the year the SAO is issued, but must be met before the SAO is issued. A CE hour is defined as 50 minutes. 20 20 10
  12. 12. Relevant Continuing Education Continuing education is “relevant” if (1) it broadens or deepens an actuary’s understanding of one or more aspects of the work an actuary does; (2) the material expands an actuary’s knowledge of practice in related disciplines that bear directly on an actuary’s work; or (3) it facilitates an actuary’s entry into a new area of practice. 21 21 Organized Activities “Organized activities” involve interaction with actuaries or other professionals working for different organizations. Examples of organized activities include, but are not limited to, conferences, seminars, webcasts, in-person or online courses, or committee work that is relevant CE. 22 22 11
  13. 13. Organized Activities (continued) In-house meetings can constitute “organized activities” by using outside speakers, otherwise in- house meetings without an outside speaker could qualify as an “other activity” for CE credit purposes. “Outside speaker” does not include someone employed by the same company working at a different location. 23 23 Other Activities “Other activities” – include, but are not limited to: • reading actuarial literature, statutes or regulations, • reading other books, papers or articles on relevant technical or professional topics, • writing professional papers or articles, • listening to tapes of actuarial meetings or other relevant seminar or conferences, • in-house meetings, • studying for actuarial exams, • drafting actuarial exam questions, and • preparing to speak or lead a discussion at a continuing education activity. 24 24 12
  14. 14. Professionalism Topics Professionalism topics – include, but are not limited to, the following: • studying, reviewing, or providing input on an Exposure Draft of an ASOP; • studying or reviewing the Code of Professional Conduct; or • serving on the ASB or a professionalism committee. The professionalism component may be satisfied by either organized activities or other activities. 25 25 General Business Skills General business and consulting courses under the qualifications standards may count towards your annual CE requirements but are capped so that no more than 3 CE hours may be attributable to general business courses. General Business and Consulting Skills –include, but are not limited to, the following: • client relationship management; • presentation skills; • communication skills; • project management; and • personnel management. 26 26 13
  15. 15. Continuing Education Determination Ultimately, it is an actuary’s responsibility to make a reasonable, good-faith determination of what continuing education opportunities will enhance an actuary’s ability to practice in a desired field. The Academy does not at this time audit members for compliance with the U.S. qualification standards. 27 27 No More Approved Providers The revised qualification standards have done away with the approved provider program contained in the pre-2008 qualification standards; therefore there in no longer an approved provider list at the Academy website. Each actuary will be required to determine whether the event or activity they attend constitutes “relevant continuing education” that will satisfy the qualification standards. This does not effect the JBEA’s regulation regarding EA’s obtaining CE from an approved sponsor of CPE approved by the Joint Board. 28 28 14
  16. 16. CE and Enrolled Actuaries Under the pre-2008 Qualification Standards an Enrolled Actuary was deemed to meet the continuing education requirements under the qualification standards for the issuance of PSAOs in the pension practice area if he or she complied with regulations issued by the Joint Board for the Enrollment of Actuaries. 29 29 CE and Enrolled Actuaries (continued) Under the revised Qualification Standards, Enrolled Actuaries who issue Statements of Actuarial Opinion “related to retirement plans to which ERISA applies” will be deemed to meet the new Qualification Standards requirements for continuing education if they satisfy the Joint Board CE requirements, but only through 2010. Commencing in 2011, this exemption will apply only to Form 5500 Schedule B certifications and other government-required forms. For any other SAO, Enrolled Actuaries must meet all of the revised CE requirements including 30 hours annually. 30 30 15
  17. 17. Specific Qualification Standards The requirements for the Specific Qualification Standards have not substantially changed. They only apply to actuaries who issue the following SAOs: NAIC Life and A&H Annual Statement NAIC Property and Casualty Annual Statement NAIC Health Annual Statement 31 31 Specific Qualification Standards (continued) The only change to the basic education section is the addition of reinsurance on the property/casualty list. The continuing education requirements increased from 12 to 15 CE per calendar year. The CE requirements of the Specific Qualification Standards also satisfy the General Qualification Standards CE requirements and are not in addition to the 30 hour requirement. 32 32 16
  18. 18. Frequently Asked Questions What are the CE (continuing education) requirements for actuaries who issue Statements of Actuarial Opinion (SAOs) in 2009? Under the revised standards, what does the “grandfather” clause for basic education and experience mean for actuaries? Under the new Qualification Standards, in-house meetings can qualify as organized CE activities only if outside speakers are invited. To what extent must the outside participant be involved in the meeting? 33 33 SOA CPD Requirement Mike Boot, Managing Director 17
  19. 19. SOA CPD Requirement Program Provisions Alternative Compliance Certification of Compliance 35 35 Who All SOA members must meet the requirement • ASA, CERA and FSA An ASA/CERA still taking exams must meet the requirement, but exams/studying count • Retirees too, but compliance different 36 36 18
  20. 20. Who Must comply once you have attained your first SOA credential • Must start earning CPD credits the year after the attainment of your first credential • Example: Attain ASA in spring 2011. Start earning credits in 2012, first certification of compliance as of December 31, 2013. 37 37 When Effective date: January 1, 2009 Must certify compliance as of December 31 of each year • First certification December 31, 2010 At the end of each year, the member will certify compliance with the requirement during the past two calendar years 38 38 19
  21. 21. How to Meet the Requirement Two ways to meet the requirement • Basic Requirement Provisions • Alternative Compliance Can combine them (more later) 39 39 Don’t panic If you are subject to the US Qualification Standard, you may use alternative compliance to meet the SOA CPD Requirement • If you meet the US Qualification Standard, you meet the SOA standard • This is considered compliance in full 40 40 20
  22. 22. Basic Requirement Two-year rolling cycle 60 units every 2 years • One unit = 50 minutes (1 hour = 1.2 units) 41 41 Summary of key provisions Summary of Key Provisions of the CPD Requirement (per cycle) Requirement Requirement Category (% of credits) (units per cycle) Structured or self-study Job-relevant skills 75 percent of 45 units At least three structured units credits minimum minimum must be in professionalism Business and 25 percent of 15 units Can be either management skills credits maximum maximum Total required 60 units At least 30 units per cycle must credits be structured credit* *At least three units of structured credit per cycle must be in professionalism; other structured units can be in any combination of job-relevant and business skills that meet the required minima and maxima. At least 7.5 units of structured credit must be from a source other than the employer. 42 42 21
  23. 23. Definitions Job-relevant: CPD credits are job-relevant if they broaden or deepen a member’s knowledge of work. • Can include technical topics, nontechnical topics and professionalism. Business and management skills: Skills not unique to the actuarial profession that improve personal effectiveness 43 43 Definitions Structured credit: any organized activity or any experience derived from an organized activity with an opportunity for participant interaction • Meetings, seminars, webcasts, some volunteer activities • Listening to audio, viewing video, or reading transcripts of organized activities • At least 7.5 units per cycle from a non-employer source Self-study: No limit on activities that count, except normal work duties do not count 44 44 22
  24. 24. What’s the difference between normal job duties & CPD? Learning something new for your job is a professional development activity that is job-relevant CPD. Applying something new in your job is part of your normal job duties, and would not be CPD. 45 45 Students If you’re still taking exams, you earn structured credit for… • An “effective attempt” at an FSA examination See table • Successful completion of an FSA module (generally 7.5 units/module) Studying for exams and reading module materials is self-study 46 46 23
  25. 25. Structured Credit for Exams Structured Credit Units Earned for an Effective Attempt* at an FSA Examination Structured Credit Units Earned FSA Exams 15 CSP-RC, CSP-IU, CSP-IC, CSP-GH, APMV, AFE, FET, DP-GH, DP-IU, DP-IC, DP-RC 10 CSP-RU 7.5 DP-RU, EA2-A 5 credits EA2-B *An effective attempt is defined as a score that is greater than or equal to 50 percent of the passing score. On the SOA’s 0 to 10 scale, this would mean a score greater than zero. 47 47 Alternative compliance Members who are subject to one of the following standards may elect to meet that standard instead: • U.S. Qualification Standard • CIA Qualification Standard • Category 1 or 2 of the U.K. CPD Scheme • The Institute of Actuaries of Australia CPD Standard Subject to: Through membership or by other means, you are subject to this CPD standard 48 48 24
  26. 26. Alternative Compliance You can combine standards within the 2- year period • 1 year meet the SOA standard & one year meet the US Qualification Standard OR • 1 year meet UK Category 1 & 1 year meet the US Qualification standard 49 49 Certification of Compliance At December 31 of each year member must certify compliance • First certification period as of December 31, 2010 • Will have a few months to complete certification • Certify electronically 50 50 25
  27. 27. Compliance Members must keep a log • What was it, date, structured/self-study, job- relevant or business & management, etc. • Not required to have certificates of attendance If meet an alternative compliance standard, must show a log of how you’ve complied with that standard 51 51 Compliance We will audit a small subset of members (~Up to 1%, 200 members) To ensure that members are complying with the CPD standard If you are audited, you need to submit your log • No need for certificates of attendance • Form could be TRACE or CCA tool or Excel 52 52 26
  28. 28. Compliance Members who do not meet the SOA CPD requirement must inform anyone relying on their actuarial expertise that they have not met the SOA CPD requirement. The online member directory will be altered to add a heading for the SOA Continuing Professional Development Requirement (2011) • “Compliant” or “Non-compliant” • If you are retired, “Retired” 53 53 Compliance Michelle Member Designations [Title] [Michelle’s designations] [Employer] SOA Continuing Professional Development [Contact information] Requirement Compliant (2009-2010) [Other information as shown in the directory] 54 54 27
  29. 29. Compliance Michelle Member Designations [Title] [Michelle’s designations] [Employer] SOA Continuing Professional Development [Contact information] Requirement Non-compliant (2009-2010) [Other information as shown in the directory] 55 55 QUESTIONS? 56 56 28