SOA CPD Exposure Draft

[m_m]

If a Canadian actuary recently started working in the US, is neither member of CIA or AAA, is he/she only subject to the SOA CPD?

[Katie.]

Originally Posted by JMO

Either the Complicated SOA rules apply to some people in the US, or they don't. And I want to know which is actually the case. Because, if anybody in the US is subject to the proposed rules rather than AAA, I want to submit a different set of comments.

Obviously, I am not Bruce. My reading of the document is that for US actuaries to keep FSA (not inactive), they have a choice between the US Qualification Standard and the SOA standard. If someone is a CEO and is not issuing Statements of Actuarial Opinion and therefore is not subject to the US Standard, it appears it might be easier to qualify under the SOA guidelines because they allow for a broader set of experiences (more general business). I'd be interested to know if I am interpreting this correctly.

[bdschobel]

Originally Posted by Katie.

Obviously, I am not Bruce.

And how is that obvious?

My reading of the document is that for US actuaries to keep FSA (not inactive), they have a choice between the US Qualification Standard and the SOA standard. If someone is a CEO and is not issuing Statements of Actuarial Opinion and therefore is not subject to the US Standard, it appears it might be easier to qualify under the SOA guidelines because they allow for a broader set of experiences (more general business). I'd be interested to know if I am interpreting this correctly.

I agree with your statement.

Bruce

[short & sweet]

Originally Posted by JMO

The CAS, as I understand it, just said that everyone in the US is subject to the AAA rules. (I think they somehow carved out an exception for Canadians.)

If the AAA CPD rules only apply to individuals issuing statements of actuarial opinion in the U.S., doesn't that mean that the CAS is just saying that casualty actuaries who issue statements of actuarial opinions in the U.S. must meet the AAA CPD rules? Is the CAS requiring anything for casualty actuaries who don't issues statements of actuarial opinion?

[short & sweet]

Originally Posted by Katie.

If someone is a CEO and is not issuing Statements of Actuarial Opinion and therefore is not subject to the US (Qualification) Standard, it appears it might be easier to qualify under the SOA guidelines because they allow for a broader set of experiences (more general business).

In what ways do the SOA guidelines "allow for a broader set of experiences"? Also, when referencing to "US Qualification Standards" is that referring only to the continuing education part of qualification standards?

[Katie.]

Originally Posted by short & sweet

In what ways do the SOA guidelines "allow for a broader set of experiences"? Also, when referencing to "US Qualification Standards" is that referring only to the continuing education part of qualification standards?

The SOA allows 15 units (where unit = 50 minutes or 1 continuing ed hour) of general business and management continuing ed per 60 unit cycle. The US standards cap this at 3 units per 30 unit year.

I did have a question about something - if I am a CEO, wouldn't general business and management be directly applicable to my job, so that should be able to count towards the job-related 30 unit requirement? What if I'm a marketing person and never issue SAOs?

Your second question is a good one, I don't know the answer.

And Bruce, anyone who has compared our posts would find it obvious that you are not Katie.

[Mary Hardy]

Originally Posted by Katie.

I did have a question about something - if I am a CEO, wouldn't general business and management be directly applicable to my job, so that should be able to count towards the job-related 30 unit requirement? What if I'm a marketing person and never issue SAOs?

I think FAQ D1 on the SOA site confirms this, that skills appropriate to the individual's job might not be technical actuarial for those in management or wider fields, and that is OK.

[TiderInsider]

This Q may have been covered somewhere in this thread (if so, please excuse my laziness), but I didn't see it in the FAQ. It is possible to start accruing CPD credits before 1/1/09? I heard some co-workers mention that they would get CPD credits for listening to the CPD webcast a month or so ago, but I didn't think that was possible because the 2-year cycle doesn't start until 1/1/09? Can I start earning credit for the FSA exam I am studying for?

[JMO]

Originally Posted by TiderInsider

This Q may have been covered somewhere in this thread (if so, please excuse my laziness), but I didn't see it in the FAQ. It is possible to start accruing CPD credits before 1/1/09? I heard some co-workers mention that they would get CPD credits for listening to the CPD webcast a month or so ago, but I didn't think that was possible because the 2-year cycle doesn't start until 1/1/09? Can I start earning credit for the FSA exam I am studying for?

From Section D, item 2 of the draft:

Members must certify compliance as of December 31 of each year, beginning on December 31, 2010.

Anything more than 2 years before that date doesn't "count." And, under the provisions of the draft, you are not required to demonstrate compliance any earlier than that.

However, you might as well get in the habit of recording your CPD. At my company, we actually began holding our annual "structured education" sessions last year, 2007.

Note:
The fact that the CPD document doesn't go into effect until some future date does NOT mean you don't need to do CPD until then. There is still the "look in the mirror" requirement - you must satisfy yourself that your education and experience qualify you to give actuarial advice.

[MNSmith]

For those who are interested, the following was sent to the SOA Board today:

TO: The Society of Actuaries’ Board of Directors



RE: The Exposure Draft of the Continuing Professional Development Requirement



I am a member of the CIA Board and was elected in June 2007 in part because of my position against the CIA CPD structure and (among other things) its specific applicability to members engaged in foreign practice. I have been an active volunteer in the CIA since 1995, all in the education and eligibility sector. My comments are my own and should not be construed as official CIA opinion.

Under Annotation 2-1 of the SOA Code of Professional Conduct, the member must comply with the qualification standards promulgated by an IAA organization for the jurisdiction in which the member is rendering Actuarial Services. Thus, for example, members of the SOA rendering services in the US and/or Canada must currently comply with the qualification standards of the AAA and the CIA respectively, which (by definition) includes the respective CPD standards of those organizations. This Rule applies to SOA members even if they are not members in the AAA or CIA.

Therefore, the SOA CPD requirement is, at best, irrelevant; the necessity for a member’s continuing education is covered by the CPD standards of the AAA, the CIA or any other IAA association where the member renders Actuarial Services. At worst, the SOA CPD requirement causes confusion for members rendering Actuarial Services in IAA jurisdictions beyond the US or Canada. Annotation 2-1 embraces all IAA associations but the CPD proposal only provides alternative compliance with the AAA or CIA CPD standards. What problems have arisen since Annotation 2-1 was written which makes the SOA believe it needs to write its own CPD requirement? Members of other IAA associations who are also members of the SOA via mutual recognition (say) might quickly relinquish their SOA membership if it is deemed that they get no credit for their home organization’s qualification standards.

That said, and focusing strictly on the US and Canada for the moment, the proposed SOA structured component of 50% of the total requirement is very high compared to the AAA and CIA components, which are 20% and 24% respectively. The SOA is the primary provider of structured actuarial education and research in North America. In absence of any logical explanation for this high percentage, the SOA Board risks being viewed as operating in its own self-interest, rather than on behalf of its members and their publics.

The AAA and CIA acknowledge in their CPD standards the difference between (i) actuarial opinion and (ii) actuarial judgement in areas which are not the exclusive domain of actuaries. The former is subject to CPD standards, the latter is not. The SOA draft proposal makes no such distinction, and as such, is in direct conflict with Precept 2 and the definition of Actuarial Services. Said differently, if a member provides services which are not “opinions based on actuarial consideration”, then these are not Actuarial Services and Precept 2 is not applicable, and by extension, no form of SOA CPD should be applicable. The AAA and CIA specifically recognize an exemption from CPD when a member is not providing services of an actuarial nature, whereas the SOA draft proposal is silent. This creates an anomaly for those who have membership in all three organizations but are exempt from the CIA and AAA CPD standards.

Non-complying members of the AAA and CIA CPD standards will find themselves down the path of a well-defined disciplinary process, pending the outcome of which their status and designation remains unchanged. The SOA proposes to immediately append a non-compliant member’s designation with “inactive”. This break from conventional due process is unsupported by the SOA By-Laws.

• Currently, the SOA By-Laws provide for only two classes of membership, and the designations of ASA or FSA can be used by members (as applicable) who are in good standing. The SOA CPD proposal for use of the term “inactive” requires the member to inform all of their publics that their credentials have been changed to “inactive”. Clearly, this implies a third and fourth class of membership (ASA (inactive), FSA (inactive)), and as such, necessitates a By-Law change which must be put to a membership vote. Even if my definition of “class of members” is challenged, the current By-Laws only provide for a disciplinary course of action for non-compliance with the proposed CPD; any other course of action can only be facilitated through a By-Law change and membership vote, not through a provision in the CPD requirement itself.

The CIA tried a similarly ministerial approach when originally proposing to expel non-compliant members in a fashion similar to the non-payment of dues. This necessitated a By-Law change which required membership approval. Membership defeated the By-Law change by a margin of 2-1 despite approving the actual CPD Standard a year earlier. This illustrated a couple of interesting new laws of nature – (i) members insist on logical standards when you introduce draconian consequences for non-compliance, and (ii) standards which affect the entire membership should be exposed and actively discussed over a period greatly in excess of the usual three month exposure period.

With this CPD proposal, the SOA Board has embarked on a path down a very slippery slope. Historically, actuarial associations have promulgated CPD as a “belt and suspenders” approach for compliance with a rapidly expanding library of practice standards. But the SOA has no standards of practice per se. The proposed CPD requirement does nothing to enhance the SOA franchise, since the SOA Rules already defer to IAA franchises on matters of qualification standards and practice standards. But worse, the lack of harmonization with the other IAA CPD standards may cause a polarization which would not be in the best interests of the SOA or its members.


In closing, I would encourage the SOA Board to remember that they serve at the pleasure of the members, and not vice versa. Even if the Board feels safe in the opinion that no By-Law changes or formal membership vote are required, the experience of the CIA has taught us that any CPD proposal is controversial, and thus should evolve in an environment of transparency and full disclosure, with multiple opportunities for member input at each decision point. Oddly, SOA member input has been limited and restricted to the CPD proposal’s content rather than its appropriateness. If you truly seek to enhance the profession’s franchise, I would encourage the Board, at the very least, to seek member ratification of this proposed CPD requirement.

Regards,




Michael N. Smith, FSA, MAAA, FCIA
21 February 2008