Current CAS Issues and Directions

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Current CAS Issues and Directions
Robert F Wolf (Bob) CAS Board of
Directors Director, Navigant Consulting,
Inc. Midwest Actuarial Forum 3/17/06 Allstate,
Northbrook, IL
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Agenda

• CAS Centennial Goal / ERM Initiatives
• Governance Initiatives on 2006 Ballot
• Task Force on Actuarial Credibility
• Task Force on Publications
• Basic Education Initiatives
• Research Working Parties
• Continuing Education
• Image of the Actuary Campaign
• Your Input

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CAS Centennial Goal

• The CAS will be globally recognized as the
  preeminent resource in educating casualty
  actuaries and conducting research in casualty
  actuarial science. CAS members will be
  recognized as the leading experts in the
  evaluation of hazard risk and the integration of
  hazard risk with strategic, financial and
  operational risk.

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Implementing the Centennial Goal

• Significant, Attainable, Measurable Goals
• Interim milestones to help gauge progress towards
  the Centennial Goal.
• 2006 LRPC Goal Critically review the SAM Goals.
• Environmental Scans Challenges
• Competition for Risk Integration ERM Services
• Marketing Actuarial Skills
• Volunteerism
• Internationalism
• Quantification Skills
• Reputation of the Actuarial Profession

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ERM Initiatives

• During 2005, the CAS Board took actions to help
  the actuarial profession benefit from new
  opportunities in Enterprise Risk Management
• Approved CAS/SOA Risk Management Section.
• Launched partnership with Enterprise Risk
  Management Institute International, Ltd. (ERMII).
  
• Created new Vice President of Risk Integration
  and ERM position to oversee ERM-related
  activities.
• Formed ERM Task Force to examine the CAS.

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Risk Management Section

• Similar to the existing CAS special interest
  sections CARe and AIR.
• Both CAS and SOA members are eligible to serve on
  the Council that guides the activities of the
  Section.
• Members are encouraged to join the Section.
  Annual dues are only 20.
• Learn more on the CAS Web Site ? About CAS ? CAS
  Special Interest Sections.

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Other ERM Initiatives

• ERMII is a private, not-for-profit, independent
  educational and research organization led by CAS
  Fellow Shaun Wang.
• ERMII is co-sponsored by an international group
  of universities and professional organizations
  including Georgia State University, University of
  New South Wales, University of Illinois, Wuhan
  University (China), and the CAS.
• VP-Risk Integration and ERM to oversee and
  coordinate ERM-related activities.

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Other ERM Initiatives

• CAS ERM Task Force
• Goal Spotlight the CAS itself as an example of
  ERM best practices.
• Charge Implement an ERM process for the CAS,
  report on the outcome of this effort by the
  September 2006 Board meeting, and prepare an
  article, authored by the Executive Director and
  the President, for placement in a magazine such
  as Association Management.

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Other ERM Initiatives

• ERM Credential (SOA Initiative)
• Board response The CAS
• Discourages consideration of an independent ERM
  credential sponsored by the actuarial profession.
• Should focus on enhancing the role of actuaries
  in ERM by
• Providing continuing education, conducting
  research, promoting actuarial skills in
  addressing ERM issues, and exploring changes to
  the CAS basic education syllabus.
• Favors a partnership with ERMII -- support ERMII
  in its education and research, particularly as
  these initiatives enhance the role of actuaries
  in ERM.
• Looks forward to a continuing partnership with
  the SOA in enhancing opportunities for actuaries
  in ERM.

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ACAS Right to Vote

• Right to vote should be granted upon earlier of
  Fellowship or five years after admission as a
  member.
• All voting members should be allowed to stand for
  election to the Board of Directors.
• Voting Associates may hold all officer positions,
  with the exception of
• President
• President - Elect
• Vice President - Admissions

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ACAS Right to Vote

• Voting rights unchanged since 1914 reflect a
  time when there was a greater difference between
  classes.
• Associates are an important part of the Society
• 25-30 of Associates no longer take exams.
• Many Associates contribute extensively to the
  profession as volunteers, on committees, as
  speakers and authors, etc.
• Contributions as practitioners they have equal
  practice rights.
• Associates pay full dues, but cannot vote.
• Mutual Recognition issues.
• Ought an ACAS have the same vote as a MR CAS
  member ?

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Task Force on Governance

• Board proactively considers governance issues by
  allotting time during Board meetings for
  discussion.
• Formed Board Task Force on Outside Representation
  in CAS Governance Process in March 2005.
• Charged with considering the role of outside
  representation in the CAS governance process.

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Task Force on Governance

• Appointed (Non-Actuary) Board MembersCreate a
  class of Board Members consisting of up to three
  additional Board Members to be appointed by the
  Board.
• Academy Role at CAS Board MeetingsParticipation
  at Board Meetings by the Casualty Vice President
  of the AAA should be formalized through policy
  or, if recommendation 1 is implemented, through
  an appointment to the Board.
• Executive Director as Member of Executive
  CouncilThe Executive Director should be
  officially designated as a member of the
  Executive Council.

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Why Have Appointed, Non-Actuary Board Members?

• Better Decision-Making
• Broader input is always better in setting
  strategy and policy.
• Move away from inward thinking.
• Perception
• Prevailing schools of thought on governance
  endorse this approach.
• Positions CAS as outward looking and forward
  thinking.

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Task Force on Actuarial Credibility

• Established to identify, prioritize, and
  investigate the feasibility of possible
  strategies for enhancing the perceived
  credibility of the actuarial profession and to
  develop action plans for implementation of those
  strategies considered to have the greatest
  potential for high impact.

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Task Force on Actuarial Credibility

• Enhance the transparency of the actuarys
  conclusions by clearly identifying differences
  between managements best estimate and the
  actuarys best estimate.
• Enhance the publics understanding of actuarial
  estimates.
• Improve the transparency of disclosures by
  requiring that the actuarial report contain an
  exhibit that summarizes changes in the actuarys
  estimates from one period to the next.

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Task Force on Actuarial Credibility

• Enhance the quality of corporate governance by
  educating audit committees or board of directors
  or both on the roles and responsibilities of the
  appointed actuary.
• Enhance the self-governance of the profession by
  requiring the appointed actuary to provide an
  explanatory document with the ABCD whenever the
  change in the actuarys reserve estimates over a
  defined period exceeds certain predetermined
  thresholds..
• Elevate the unique role of the appointed actuary
  within the statutory financial reporting
  environment by incorporating an Actuarial
  Statement within the Jurat Page of each companys
  Annual Statement.

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Task Force on Actuarial Credibility

• Task Force Report presented to the CAS Board in
  May 2005. Board accepted the Report and directed
  the EC to implement recommendations as
  appropriate.
• Two additional Task Forces formed
• Joint Task Force for Enhancing the Reputation of
  Casualty Actuaries
• CAS Task Force for Enhancing the Reputation of
  Casualty Actuaries

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CRUSAP

• Critical Review of the U.S. Actuarial Profession
  (CRUSAP) Task Force formed by the AAA.
• CRUSAP will identify and analyze risks and
  opportunities facing the actuarial profession and
  provide recommendations for meeting emerging
  challenges.
• 30 members serve on the CRUSAP advisory panel.
• Fred Kilbourne is chairperson of the CRUSAP Task
  Force.
• See www.crusap.net for more information.

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Task Force on PublicationsRecommendations

• Remove papers from PCAS. Keep CAS-specific
  content and add Yearbook content.
• Create a yearly Membership Directory publication
  as a separate soft-cover publication.
• Create a new journal where refereed papers will
  be published. The editor is Gary Dean.
• Encourage non-CAS members to publish in the new
  journal actively solicit articles from around
  the world.

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Basic Education Initiatives

• Validation by Educational Experience
• Economics
• Finance
• Applied Stats
• Computer Based Testing
• Modeling Workshop
• FCAS Education

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CBT Implementation for Exam 1

• September 2005 First administration
  (paper/pencil backup for areas without centers).
• February 2006 Second administration
• 2006 - 4 CBT administrations total.
• Immediate release of grades beginning in 2006.
• Rollout to other exams in future years.

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Modeling Workshop

• Education in risk integration techniques is
  consistent with Centennial Goal.
• DFA added to Syllabus in 2000.
• DFA taken off Exam 8 in 2003 due to inability to
  test in a paper-and-pencil environment.
• Modeling Workshop Task Force established.
• Piloted a hands-on workshop experience.
• Consider adding this as a future FCAS requirement
  and/or continuing education opportunity.

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FCAS Education

• Task force established in late 2004 to recommend
  Learning Objectives for what it means to be an
  FCAS.
• Considerations
• Perhaps reducing total number of exams by one
  (i.e., 8 exams plus VEE).
• Including a mandatory workshop (e.g., DFA
  Modeling Workshop).
• Recommendations delivered to CAS Board in
  November 2005.

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FCAS Education

• Board Task Force on FCAS Education formed in late
  2005 to consider policy-level issues.
• Task Force Report was focus of January 2006 Board
  meeting, during which four resolutions were
  passed
• Prepare a White Paper.
• Board endorses use of electives in basic
  education.
• Electives to be available post-Fellowship for CE.
• Mastery of core topics must be demonstrated by
  all candidates through rigorous methods.

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Research Working Parties

• Research task forces.
• Process should result in quality work products.
• Brings together the research energy of individual
  researchers.
• Proven to be effective for GIRO, the general
  insurance research organization of the Faculty
  and Institute of Actuaries (UK).

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Research Working Parties

• 2004-06
• Dynamic Risk Modeling Handbook
• Public-Access DFA Model
• Bornhuetter-Ferguson - Initial Expected Losses
• Tail Factors
• Risk Transfer Testing
• Data Management and Information Educational
  Materials
• Loss Simulation Model

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2006 Calendar of Events

• ERM SymposiumApril 23-26, Chicago
• Spring MeetingMay 7-10, Puerto Rico
• Seminar on ReinsuranceJune 1-2, New York City
• CLRSSeptember 11-12, Atlanta
• Seminar on Predictive ModelingOctober 4-5, 2006,
  Boston
• Annual MeetingNovember 12-15, San Francisco

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Image of the Actuary Campaign

• Profession-wide campaign.
• Image Advisory Group, made up of members from
  each of the North American actuarial
  organizations, oversees campaign.
• www.imageoftheactuary.org/ for more information.

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I welcome your input regarding . . .

• CAS Centennial Goal / ERM Initiatives
• Governance Initiatives on 2006 Ballot
• Task Force on Actuarial Credibility
• Basic Education Initiatives
• Research and Publications
• Continuing Education
• International Issues
• Whats On Your Mind?
• Questions?

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• Thank You!