What Are The Minimum Requirements An Actuary Should Consider To Be Qualified To Render Opinions Related To PBR Under The U.S. Qualification Standards?

Question: 
What are the minimum requirements an actuary should consider to be qualified to render opinions related to principle-based reserves (PBR) under the U.S. Qualification Standards (USQS)?

Answer:
A credentialed actuary who issues a Principle-Based Reserves (PBR) Statement of Actuarial Opinion (SAO) when providing Actuarial Services must satisfy the requirements contained in the USQS. Some of the primary requirements that an actuary should consider are listed below:

1) The actuary must first meet the Basic Education and Experience Requirements for the primary practice area(s) in which the actuary intends to provide an SAO. For instance, if the actuary will be rendering a PBR SAO regarding life insurance, the actuary must be a fully qualified member of an International Actuarial Association (IAA)-member organization, have three years of responsible actuarial experience, and be knowledgeable of the Law applicable to the SAO (See Section 2.1 of the USQS).

Additionally, since this hypothetical opinion regards life insurance, the actuary must have:
  • Attained the highest level designation in the U.S.-based organization that has a life specialty track, which is currently the SOA, and have completed the life specialty track,
  • Attained the highest level designation in an IAA-full member organization and have obtained at least one year of responsible actuarial experience in the life practice area under the review of another actuary qualified to render life insurance SAOs, or
  • Obtained a minimum of three years of responsible actuarial experience under the review of another actuary qualified to render life insurance SAOs.

2) Consistent with Section 2.1 of the USQS, the actuary must be familiar with the Law applicable to PBR Statements of Actuarial Opinion. Per the Code of Professional Conduct, “Law” is defined to include statutes, regulations, judicial decisions, and other statements having legally binding authority. Examples of such law pertinent to PBR are the applicable NAIC Valuation Manual and the revised Standard Valuation Law.

3) If the area of practice to which the SAO applies is new to the actuary, then USQS Section 4 must be met.

4) If the SAO involves one of the Specific Qualification Standards SAOs, namely, the actuary is signing an NAIC Annual Statement opinion, the actuary must meet the requirements of Section 3 of the USQS as well.

Section 3.3 regarding the NAIC annual statement opinion requires actuaries to have a minimum of 15 CE hours on topics related to the NAIC annual statement opinion, which in the case of life includes in Section 3.1.1.1 “… (f) valuation and nonforfeiture laws,” and therefore requires CE on the PBR valuation law, among other things.

5) Per USQS Section 2.2, actuaries must remain current in relevant, emerging advancements in actuarial practice and science that are relevant to the Actuarial Services (as defined in the Code of Professional Conduct) they provide. This section involves keeping up to date on continuing education relevant to an actuary’s practice.

In the case of PBR, a sample of source material for those advancements is listed on the Academy website, on the Principles-Based Approach (PBA) Project page.