IAA and the EDUCATION of ACTUARIES Training the actuaries of the future for a global profession Chris Daykin, Chief Executive, IAA Fund Second African Congress of Actuaries Nairobi, 3-4 November 2011
INTERNATIONAL ACTUARIAL ASSOCIATION (IAA) Core Syllabus and Guidelines > IAA has adopted core syllabus and guidelines > as a requirement for Full Member status > all associations applying are tested against requirement > to become Full Member Associations of the IAA > Full Member Associations may require more but not less! > revised syllabus approved by IAA Council in April 2007 > http://www.actuaries.org/about/documents/education_guidelines_en.pdf > http://www.actuaries.org/about/documents/education_syllabus_en.pdf
IAA CORE SYLLABUS Ten subject areas > financial mathematics > probability and mathematical statistics > economics > accounting > modelling > statistical methods > actuarial mathematics > investment and asset analysis > actuarial risk management > professionalism
IAA CORE SYLLABUS Principal changes in April 2007 > financial mathematics (updated and modernised) > probability and mathematical statistics (no change) > economics (no change) > accounting (no change) > modelling (expanded) > statistical methods (expanded) > actuarial mathematics (completely rewritten and expanded) > investment and asset analysis (expanded and new title) > actuarial risk management (rewritten and new title) > professionalism (greatly expanded)
IAA CORE SYLLABUS Principal changes in April 2007 > financial mathematics (updated and modernised) > deterministic theory of interest rates > generalised cash-flow models > introduction to contingent claims analysis > term structure of interest models > risk neutral valuation > stochastic calculus of finance > stochastic theory of interest > dynamic portfolio management > introductory applications to insurance and financial liabilities
IAA CORE SYLLABUS Principal changes in April 2007 > actuarial mathematics (completely rewritten and expanded) > nature of events giving rise to a contingency > typical solutions offered by insurance, social insurance, etc > actuarial methods for evaluating the prospective cost of solutions > actuarial methods for monitoring the results and maintaining financial stability, such as: > reserving > financial reporting > reinsuring > profitability analysis > financial condition analysis
IAA CORE SYLLABUS Principal changes in April 2007 > actuarial risk management (rewritten and new title) > risk types and risk measures > management of risks and methods of reducing exposure > monitoring the experience and exposure to risk > management of the relationships between assets and liabilities > profitability of the enterprise and management of capital > principles of regulation of financial institutions
IAA CORE SYLLABUS Principal changes in April 2007 > professionalism (greatly expanded) > characteristics and standards of a profession, including need for: > specialised skill and education > ongoing training and development > high quality of advice > exercise of independent judgement > objectivity, integrity and accountability > code of conduct > discipline process > practice standards set by actuarial bodies or other stakeholders > regulatory roles of actuaries > the professional role of the actuary
INTERNATIONAL ACTUARIAL ASSOCIATION (IAA) Core Syllabus and Guidelines changes in 2012 > Education Committee will submit revised syllabus and guidelines to IAA Council in May 2012 > main change to guidelines: > encouragement to provide training in communication skills > both oral and written communication > the only recommended change to syllabus is: > introduction of financial economics
INTERNATIONAL ACTUARIAL ASSOCIATION (IAA) Financial Economics added to Subject 3 Economics > expected utility theory > Efficient Markets Hypothesis > asset return models and asset pricing models > behavioural finance: prospect theory, investor heuristics and biases
INTERNATIONAL ACTUARIAL EDUCATION Actuarial Examining Bodies > Institute and Faculty of Actuaries (UK based) > Society of Actuaries (North America based) > Casualty Actuarial Society (general insurance US based) > Actuarial Society of South Africa > Institute of Actuaries of Australia > Institute of Actuaries of India > Institute of Actuaries of Japan > China Actuarial Association
INTERNATIONAL ACTUARIAL EDUCATION Alternative approaches > professional examinations > university education > university education plus some professional exams > professional examinations with university accreditation > university education plus work experience plus thesis > government-sponsored actuarial examinations > recognition of qualifications obtained elsewhere
INTERNATIONAL ACTUARIAL EDUCATION International convergence based on IAA syllabus > strong convergence on Core Technical (subjects 1 to 7) > Joint Education Forum assists with coordination > for anglophone examining bodies > variations in investment and finance content > different approaches to Actuarial Risk Management > need to strengthen professionalism education identified
INTERNATIONAL ACTUARIAL EDUCATION Risk Management designations > qualified actuary (e.g. FIA, AIA, FSA, ASA, FASSA) > Chartered Enterprise Risk Actuary > treaty signed by 14 founding associations > including UKAP, SoA, CAS, ASSA, IAAust, IAI > accreditation of treaty signatories to award CERA > intensive checking of compliance with syllabus > I&FA s ST9 being used by several associations > not just in English
INSTITUTE AND FACULTY BASIC EDUCATION Developments in I&FA actuarial education > Actuarial Risk Management replaced old CA1 > two-day assessment for communications (CA3) > work-based skills replaced experience requirement > Associates can call themselves actuaries > ST7 and ST8 replaced old ST3 (general insurance) > ST9 in Enterprise Risk Management > CERA designation with most CTs, CAs and ST9 > experienced practitioner pathway for CERA > online versions of CT9, CA2 and CA3
SOCIETY OF ACTUARIES BASIC EDUCATION Developments in SoA actuarial education > Decision-making and Communication (DMAC) module > Financial Economics now multiple choice CBT > trialling online test in Contingencies > Centres of Excellence awards for universities > sittings twice a year for Fellowship subjects > changes to Advanced Finance and ERM in July 2012 > smoother pathway for gaining the CERA credential
Continuing Professional Development Formally defined by the IAA as: The development of knowledge and of technical, personal, professional, business and management skills and competencies throughout a person s working life. CPD guidelines approved by IAA Council on 2 October 2011
Continuing Professional Development CPD and the individual actuary CPD is an important element of the actuary s lifelong process of learning and development within the profession. The initial qualification process is the first step in this journey. Thereafter, it is the responsibility of all actuaries to plan their own professional development program.
Continuing Professional Development CPD and the actuarial association All actuarial associations are encouraged to develop and implement a CPD strategy that supports the objectives outlined in section 1.2. Such a strategy should encourage or require actuaries to carry out CPD in order to maintain their competence, foster high quality in actuarial work and promote the reputation of the actuarial profession.
Categories of actuary in I&FA CPD Scheme Now only two categories: Category 1 requiring UK practising certificates Category 2 members in paid work
CPD Category 1 Requiring practising certificate No fewer than 30 hours of verifiable activities, of which: At least 20 hours should be technically relevant to the subject area of the PC, and at least 10 hours of that should be external At least 6 hours must relate to professional skills Up to 15 hours can be for service to the Profession All PC holders are required to attend a Professionalism Event Reporting year runs from date of last PC renewal Verifiable member must be able to provide written evidence of participation if requested
CPD - Category 2 Members in paid work Mixture of events (at least five hours) and private study e.g. Hours at events Hours private study Members must decide appropriate mix Under events, members may count up to eight hours of service to the Profession relevant to work area Must attend professionalism event every 10 years All must be verifiable, at least one event to be external CPD year is from 1 July to 30 June Total 15 0 15 10 5 15 9 7 16 5 15 20
CPD - Category 2. and there s more Exemptions will apply if members can show that: Actuarial training, experience and membership does not contribute to paid work >For example, purely manual labour or performing arts They have less than 20 hours paid employment annually Serious ill-health prevents compliance Members abroad fully regulated by Profession may comply with local IAA-recognised CPD scheme Partially regulated members comply with CPD scheme of association by which they are regulated
CPD Scheme of the Institute and Faculty of Actuaries Events Any training or development involving interaction with others Examples Attending sessional meetings, conferences, seminars Attending public, formal events Webinars or interactive web-based learning Delivering learning to colleagues
CPD Scheme of the Institute and Faculty of Actuaries Professionalism Skills Skills which are required whatever your role Knowledge of Actuaries Code Skills to ensure satisfactory outcome to boss/client Examples include business skills, management, staff development and IT No longer a specific requirement for Category 2 (member decides)
INTERNATIONAL ACTUARIAL EDUCATION PROGRAMME IAA plans for international actuarial education > dropped idea of International Actuarial Education Programme > leverage existing education systems > support initiatives where external funding is available > formation of Actuarial Educators Network
IAA EDUCATION Options for English-speaking Africa > accreditation of universities > by ASSA or I&FA (or both) > I&FA examinations (with discounts where appropriate) > link-ups between universities > volunteer mentoring visits > development of on-line tuition tools
IAA EDUCATION Options for French-speaking Africa > support from universities in France/Belgium/Lausanne > university cooperation projects as in Senegal > I&FA or SoA examinations in English > volunteer mentoring visits > development of on-line tuition tools
IAA EDUCATION Longer-term options to develop > support from African Development Bank > other financial support > enabling more substantive assistance programme > perhaps in a few regional centres
IAA and the EDUCATION of ACTUARIES Training the actuaries of the future for a global profession Chris Daykin, Chief Executive, IAA Fund Second African Congress of Actuaries Nairobi, 3-4 November 2011