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INTERNATIONAL DEVELOPMENTS IN ACTUARIAL EDUCATION

INTERNATIONAL DEVELOPMENTS IN ACTUARIAL EDUCATION. Chris Daykin Chairman, Education Committee European Actuarial Consultative Group. ROUTES TO ACTUARIAL EDUCATION. exams offered by the profession university education professional exams allowing for exemptions

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INTERNATIONAL DEVELOPMENTS IN ACTUARIAL EDUCATION

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  1. INTERNATIONAL DEVELOPMENTS IN ACTUARIAL EDUCATION Chris Daykin Chairman, Education Committee European Actuarial Consultative Group

  2. ROUTES TO ACTUARIAL EDUCATION • exams offered by the profession • university education • professional exams allowing for exemptions • university education + professional exams • university education + experience

  3. 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

  4. MUTUAL RECOGNITION • mutual recognition of higher education diplomas a requirement of EU legislation from 1992 • agreement between actuarial associations in 1992 • full mutual acceptance of fully qualified actuaries …subject to adaptation period of one year • common code of conduct requirement • coordination of syllabus for actuarial education

  5. OBJECTIVES FOR EACG • strong actuarial education throughout EU • firm basis for mutual recognition • clarity for regulators in definition of actuary • development of common educational materials • increasingly European education process • European actuaries

  6. EDUCATIONAL APPROACH

  7. GC SYLLABUS STRUCTURE • Stage 0: Preliminary Stage • Stage 1: Actuarial Foundation Stage • Stage 2: Generalised Applications Stage • Stage 3: Country/Practice Area Stage

  8. mathematics probability & statistics stochastic processes computing economics accounting & reports structure of EU communication language PRELIMINARY STAGE

  9. ACTUARIAL FOUNDATION STAGE • financial mathematics • survival models and simple applications • risk mathematics • investment and asset management

  10. GENERALISED APPLICATIONS STAGE • actuarial control cycle • life insurance • general insurance • pensions and social security • health insurance & living benefits

  11. PRACTISING STAGE • country specific terminology • commercial environment • legal & accounting environment • practical applications in this context • advanced applications • professionalism & standards • continuing professional development

  12. WHAT NEEDS UPDATING? • bibliography • non-life statistical methods • more on financial maths, financial risk management and solvency methods • keep up with modern thinking • reflect convergence of practice areas • proposal to introduce finance subject

  13. ACTUARIAL FOUNDATION STAGE (revised) • financial mathematics • survival models and simple applications • risk mathematics • investment and asset management • finance and financial economics

  14. 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

  15. 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

  16. 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

  17. IAA CORE SYLLABUS - 1 • financial mathematics • probability and mathematical statistics • economics • accounting • modelling • statistical methods

  18. IAA CORE SYLLABUS - 2 • actuarial mathematics * life insurance * general insurance * pensions * health care • investment and asset management • principles of actuarial management • professionalism

  19. 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

  20. CountrySpecific Application Generalist- Traditional BusinessLeader Technical SocialSecurity Generalist- Modern General Insurance Applications Banking International Technical CapitalProjects Life Pre-entry Knowledge Pensions Education Research Health Core Analyst Core Super-Technician GeneralInvestment Risk Compliance Finance Government

  21. CORE TECHNICAL (F&IoA) Financial Mathematics Finance and Financial Reporting Probability and Mathematical Statistics Models Contingencies Statistical Methods Economics Financial Economics + Business Awareness Module (non-examined)

  22. 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

  23. 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

  24. 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

  25. ASSOCIATESHIP (F&IoA) Core Technical + Core Applications + Module 1 of Professionalism Course = Associate of Institute (or Faculty) of Actuaries (AIA or AFA)

  26. SPECIALIST AREAS • Life insurance • General insurance • Pensions and other benefits • Finance & Investment • Health & Care

  27. 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

  28. 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

  29. 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

  30. 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

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

  32. MUTUAL RECOGNITION • IAA process may facilitate mutual recognition… • … but at “Associateship” level • bilateral agreements most likely • exam for exam credit

  33. 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)

  34. 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

  35. 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

  36. CURRENT ISSUES • compliance with GC core syllabus • upgrading basic education systems • some introductory diploma programs still needed • looking for funding partners (USAID?, IFC?) • possibility of establishing regional centres • seeking IAA Education Committee support

  37. TRAINING THE TRAINERS • 29 June – 9 July • Oxford and London • Incorporating Actuarial Teachers and Research Conference

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