View Full Version : Why Loss models for risk theory, why not actuarial mathemati
12-28-2001, 11:18 PM
I guess the subject says it all.
When it was SOA 151, Bowers was the reading
now it is loss models. Why did they change it?
I think Chapters 1-2 and 12, 13 is much better than the currently prescribed
chapters of loss models.
Could Steve White answer this?
Could the catalog at least acknowledge the fact that actuarial math chapters 1-2 and 12 can be used instead of some sections of Loss models?
12-29-2001, 09:54 AM
I am much more heavily involved with the exam aspects of course 3 than the syllabus (though I was one of the reviewers for the new study note, and personally think it's a big improvement for that material). I had no involvement with the original syllabus.
Here are some possible thoughts:
1. Course 3 is a joint exam. Even though 151 was the SOA's exam on risk theory, that should not automatically imply the 151 text should be the course 3 text.
2. In the SOA-only environment, all candidates would need Bowers anyway (for 150, which most would take before 151 and all would take at some point). None would need Loss Models anyway. Thus, if the SOA considered Bowers adequate (or better), it would be undesirable to make candidates buy Loss Models as well. On course 3, everyone needs Loss Models anyway.
3. From an exam perspective, it's much easier to have one official reference, for determining what is within the scope of the syllabus, what the right notation is, etc. There's a lot of overlap between what Bowers covers and what Loss Models covers, but there are differences, too.
If you find those sections of Bowers helpful, by all means use them and suggest them to friends, just as many candidates find third-party study material helpful, even if not officially endorsed by SOA or CAS.
I will alert a couple of people, who would know more about the syllabus considerations to respond, to your question, should they wish to respond.
12-29-2001, 01:17 PM
Steve White, thank you for responding.
My point is that I think for the first two sittings (May 200 and Nov 2000 exams) reading in Loss Models had the class (a,b) discrete distributions. Recently that section was removed.
For May 2002 exam, students are suppose to read the new study note and compound distributions/aggregate claims distributions sections in Loss Models. IMHO Actuarial Math presents basic aggregate claims distributions in a much better way. I am well aware that two of the three authors of Loss Models have contributed to the area of aggregate claims distributions a lot, but that is beyond part 3.
Can't they just drop Loss Models from part 3?
Now, if the majority of students just use study manuals, this discussion is valuable only to teachers.
PS: I am familiar with former CAS 5A exam, they were using a few pages of Practical Risk Theory by Daykin (sp?) in addition to Bowers for risk theory.
12-31-2001, 12:40 PM
Do the majority of students only use study manuals?
12-31-2001, 02:49 PM
The distribution material used to be in CAS 4B, which used the predessor text to "Loss Models" (overlapping authors and material) so using Loss Models for this material seemed the obvious choice.
I used to be (but am no longer) directly involved with the syllabus for Exam 3. I will direct the new Exam 3 syllabus guy to look at your question (although I don't promise any answers here.) My personal opinion is that either "Loss Models" or the study note covers the material better. My recollection is that Actuarial Math doen'st cover very much of it. But I always found "Actuarial Math" hard to read, so maybe there's more there than I remember.
01-02-2002, 04:47 PM
This is the "new guy" on the CAS Part 3 Syllabus Committee. I didn't want to let Ginda down!
I have briefly looked at Actuarial Math Chapters 1, 2 and 11 (1986 edition). Reason #3 posted by Steve White is the best reason to use LM instead of AM. This topic is closely related to the development of frequency and severity models. Therefore, it would seem to be desirable to use consistent texts to teach both topics.
I recoginze that the frequency / severity models will now be based on the the new Study Note. However, the Study Note is simply a better organization of LM - and it is written by the same author.
01-02-2002, 06:32 PM
thanks for your responses. It is heartening to find that people at the SOA do care about helping us learn and discussing the syllabus.
01-03-2002, 06:38 AM
The new study note does not cover what we call risk theory.
Let me spout off about the risk theory in Actuarial Mathematics.
Chapter 1 is good maaterial and the equivalent material is not in Loss Models. I think actuaries should read this regardless of whether it is on the syllabus. Is this material on Exam 2?
Chapter 2 (the Individual Risk Model) is worthy of a footnote in collective risk theory (Chapter 12). The material in Chapter 12 is covered well in Loss Models. I have a question here for the life actuaries - does anybody actually use the individual risk model.
The material in Chapter 13 is totally useless for actuaries. Unfortunately the Loss Models equivalent is still on the syllabus. It assumes that policyholders keep contributing money to the insurer and the owners never get any to take any out when the insurer get a sufficient surplus. I would tolerate this formulation if the mathematics here resembled the math used in the real problem -- but it does not.
We should remember that exam space is scarce and we should not squander our exam space on this useless material.
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