Last updated December 2014
FAQs on the U.S. Qualification Standards (pdf) |
General
Area of Practice
Statement of Actuarial Opinion
Specific Qualification Standards
Continuing Education (CE)
--General CE
--Relevant CE
--Organized CE
--Professionalism CE
Principle-Based Reserves (PBR) Qualifications
Qualifications for Blended Opinions
Other
General
Last updated December 2014
Last updated December 2014
Last updated December 2014
Last updated December 2014
Last updated December 2014
Last updated December 2014
Last updated December 2014
Area of Practice
Section 4.1 provides information for actuaries wishing to become qualified in an area different from their current area of practice. Furthermore, Section 2.3 contains extensive detail on qualification for actuaries issuing opinions in more than one area of practice at the same time. There are significantly different requirements detailed for three different possibilities: opinions based on skills that can be learned in multiple areas of practice (Section 2.3.1), opinions that blend elements of multiple areas of practice (Section 2.3.2), and opinions issued by the same actuary in distinct and non-overlapping areas of practice (Section 2.3.3).
It is important for the actuary to carefully consider these paragraphs when determining whether he or she is qualified under the specific circumstances. Some professional judgment is often required, as circumstances are frequently not clear-cut. After reviewing the text of the U.S. Qualification Standards and these FAQs, an actuary still having difficulty making such a determination may submit a question directly to the Committee on Qualifications.
There are also different Specific Qualification Standards for actuaries providing NAIC Annual Statement opinions in multiple practice areas, such as life and property-casualty. Please see FAQs 19-22 for more information about specific qualification standards.
Last updated December 2014
Last updated December 2014
The Committee on Qualifications believes the clause “that is relevant to Statements of Actuarial Opinion to be issued in the new area of practice” applies to both “obtaining continuing education” and “meeting the applicable basic education and experience requirement.” An actuary is required, therefore, to satisfy the basic education and experience requirements applicable to the statements of actuarial opinion (SAOs) the actuary intends to issue in the new practice area.
An actuary should review carefully the requirements under section 2.1 with respect to the new area of practice to determine whether they have satisfied the applicable qualification standards. When considering what is needed to become qualified in the new area of practice, an actuary should keep in mind that some of the actuary’s existing education and experience may help to qualify the actuary in the new area of practice. The basic education requirement does not require an actuary to take additional examinations in the new area of practice, although an actuary may wish to do so.
An actuary intending to issue an SAO for which the Specific Qualification Standards have been adopted should review the “additional specific knowledge requirements” outlined in section 3.1 and the provision for “Alternative Basic Education” in 3.1.2. The experience and continuing education requirements of the Specific Qualification Standards are set forth in sections 3.2 and 3.3.
Last revised October 2016
Enrolled actuaries who are also members of one or more of the five U.S.-based actuarial organizations and who issue Statements of Actuarial Opinion (SAOs) must satisfy the USQS CE requirements except in the event that the enrolled actuary issues only SAOs related to Form 5500 Schedule B certification and other ERISA forms. Enrolled actuaries who issue only Schedule B certification and other ERISA forms are encouraged to comply with the USQS (Section 2.2.8). Enrolled Actuaries are required to comply with the CE requirements issued by the Joint Board for the Enrollment of Actuaries.
Last updated April 2019
Statement of Actuarial Opinion
“Actuarial Services” are defined in the Code of Professional Conduct as “Professional services provided to a Principal [client or employer] by an individual acting in the capacity of an actuary. Such services include the rendering of advice, recommendations, findings, or opinions based upon actuarial considerations.”
Appendix 1 to the USQS describes SAOs and lists examples of commonly issued opinions and work products and whether or not they are SAOs. Appendix 1, Section III, also describes generally what types of actuarial work involving government or other public sector actuaries may be considered SAOs.
Last updated December 2014
Last updated December 2014
The USQS define a Statement of Actuarial Opinion (SAO) as “an opinion expressed by an actuary in the course of performing Actuarial Services and intended by that actuary to be relied upon by the person or organization to which the opinion is addressed” (the Principal) [emphasis added] (Section 1).
Appendix 1 of the USQS provides extensive further clarification that effectively narrows the ability of actuaries to try to restrict communications in the ways proposed. A draft opinion provided to a Principal typically “is an SAO unless … clearly marked that it should not be relied upon.” However, “if there is a reasonable likelihood that the Principal will rely on the draft regardless of intent, that is an indication that the draft is an SAO.” Further, “if the Principal is not subsequently sent a final report … that is an indication that the draft report is an SAO.” Appendix 1 includes additional examples to guide practitioners in individual cases.
Last updated December 2014
Last updated December 2014
Last updated December 2014
B: When an actuary is asked, “What is the expected health care trend for your commercial business for next year?” and he or she replies, “10%.”
Situation A is not an SAO, assuming the actuary's reply is based on compiled data alone without any actuarial considerations.
Situation B generally involves actuarial considerations and would be an SAO.
(Section 1 and Appendix 1)
Last updated December 2014
Last updated December 2014
Specific Qualification Standards
Last revised October 2016
Last updated December 2014
Last updated December 2014
Each actuary should make a good-faith determination whether a course on professionalism meets the requirements of 3.1.1. The Committee on Qualifications encourages actuaries to obtain at least some of their professionalism hours by reviewing the Code of Professional Conduct, actuarial standards of practice, and the USQS.
Last updated December 2014
General CE
The U.S. Qualification Standards include a description of what is considered “relevant continuing education.” Ultimately it is an actuary’s responsibility to make a reasonable, good-faith determination of what CE opportunities will enhance his or her ability to practice in a desired field (Section 2.2.7).
Last updated December 2014
Last updated December 2014
Last updated December 2014
Last updated December 2014
For example, if an actuary earns 31 hours of CE in 2013 for the 2014 qualification year, then the actuary may carry over 1 hour to 2014 for the 2015 qualification year.
However, for an actuary to carry over professionalism hours, organized hours, or specific qualification hours, the actuary must have more than 30 hours in total and more hours than needed for a specific type of hours.
Last updated December 2014
Section 6.2 describes recommended materials that an actuary should retain in case of an audit. These materials include certificates of attendance (if available), meeting outlines or handouts, registration materials, and notes (in the case of “other activities”). It is up to the actuary to use his or her judgment in determining what best exemplifies compliance with the CE requirements given the circumstances of the event.
TRACE, a tool on the American Academy of Actuaries website, may be used to track hours (Section 6).
Last updated December 2014
CE earned during a calendar year typically qualifies the actuary for opinions issued during the subsequent calendar year. There are no CE “grace periods” for new members in the USQS. Section 2.2.4 specifies that an actuary may count hours earned before being credentialed, as long as the time was earned since the beginning of the prior calendar year. Section 2.2.2 further allows time spent in the current year to be “carried back” one year to make up for shortfalls, as long as the total 30 hours is earned before issuing an SAO. An example will clarify the implications of this (Sections 2.2.2 and 2.2.4).
An actuary receives his first actuarial practice credential (in this example, becomes an Associate of the Society of Actuaries [ASA]) in July 2014. He meets the basic education and experience requirements to issue an SAO in October 2014. He wants to ensure his compliance with the CE requirement as well.
When calculating his CE hours, he is allowed to count all the hours earned in 2013, and in 2014 up until the date of the October 2014 opinion, in determining his qualification to issue that opinion. This time can be earned before or after his qualification, but not before 2013. As per Section 2.2.7, time spent studying (reasonable allocated time) for relevant actuarial exams can also be included in this count as “Other Activities.” Time that this ASA spends in September 2014 studying for a Fellowship exam can also be counted, even if the studying did not result in a passing grade (Section 2.2.7).
However, any 2014 CE time that the actuary uses to qualify for his 2014 opinion cannot also be used for his 2015 opinions. He will need to earn another 30 hours of CE—normally during the remainder of 2014—to issue opinions in 2015.
Last updated December 2014
Relevant CE
Last updated December 2014
Last updated December 2014
Each actuary will need to determine whether the material is relevant to his or her area of practice based upon his or her individual circumstances.
Last updated December 2014
As an example of the difference, an actuary who is responsible for calculating statutory reserves sets aside time to review the applicable laws and regulations, study appropriate methodologies, or read recent articles about economic conditions for purposes of selecting assumptions before performing this task.
- The time the actuary spends on the planned review, study, or reading could qualify (at least partially) as Relevant Continuing Education.
- The time spent actually performing this task (calculating statutory reserves, attending business meetings to discuss results, or peer reviewing results) would not qualify as Relevant Continuing Education.
Additional features that may help to document time for CE credit include, but are not limited to, the actuary’s having a prepared agenda, the actuary retaining notes taken during the allocated time, or the actuary retaining specific records of texts, materials, or articles reviewed or topics discussed.
Last revised November 2015
The portion of committee work that is CE can be further divided into organized and other activities. CE that affords the actuary the opportunity to interact with actuaries from other organizations may be considered organized. The portion that does not afford the opportunity to interact in this way is considered other activities.
An individual on an exam committee should first make a good-faith attempt to assess the applicability and relevance of the committee work to the subject of the Statement of Actuarial Opinion to determine whether it qualifies as CE. Section 2.2.7 specifically states that drafting relevant exam questions could be considered “other activities.” The actuary might further conclude that attending a Question Writer’s Seminar was relevant “organized activity,” but that time spent grading exam responses, or serving on a Pass Mark Panel, was administrative and therefore not CE.
Last updated December 2014
Last updated December 2014
The USQS states that CE must be “relevant.” This requirement is satisfied if the continuing education
- broadens or deepens an actuary’s understanding of one or more aspects of the work an actuary does;
- expands an actuary’s knowledge of practice in related disciplines that bear directly on an actuary’s work; or
- facilitates an actuary’s entry into a new area of practice.
Last updated December 2014
Last updated December 2014
This advice should also be considered in the context of teaching actuarial courses or presenting at seminars. Teaching or presenting may not necessarily result in an opportunity by the presenter to earn relevant CE if the nature of the presentation does not allow the presenter the opportunity to discuss with and learn from others in attendance. Note that time spent preparing for the presentation might still qualify as relevant CE. If an actuary is teaching the same subject matter repeatedly, the actuary, as the teacher, may be stretching the bounds of reasonable if he or she recorded the time as relevant CE without gaining or confirming any knowledge.
Last updated December 2014
Organized CE
Last updated December 2014
Presentation/interaction by members of an “actuarial community” via teleconference would be considered an organized activity since there is live interaction between actuaries or other professionals of different organizations, presuming the subject matter being discussed is relevant CE (Section 2.2.7).
Last updated December 2014
- (a) Yes. In general, taking actuarial exams seminars count as relevant CE and (b) such actuarial exam seminar would count as “organized” CE as long as the exam seminar involves live interaction among participants from different organizations.
- (a) Yes. In general, studying for actuarial exams are considered relevant CE and (b) no, studying for such exams are considered self-study and count as “other activity” CE under the USQS. This is true even if studying occurs in a study group. A study group among actuarial students does not have the expert leadership and/or participation implied by the examples of interaction given in the USQS (conferences, seminars, webcasts, in-person or online courses, or committee work).
- (a) and (b) No. The exam time itself is not considered relevant CE or organized activity, since it does not broaden or deepen the actuary’s knowledge (consistent with the definition in section 2.2.7), as does studying or attending seminars. Rather, taking an actuarial exam illustrates to others your understanding of actuarial work.
(Section 2.2.7)
Last updated December 2017
Last updated December 2014
Last updated December 2014
Actuaries are encouraged to use good and reasonable judgment when distinguishing between a casual lunch and study group. Factors to consider are as follows:
- The purpose of the lunch
- Whether an agenda was distributed before the meeting
- The amount of preparation
- The percentage of the meeting spent on CE compared to other discussions
Last updated December 2014
Professionalism CE
Last updated December 2014
Last updated December 2014
The actuary will need to make case-by-case judgment based on the content of the specific material.
Last updated December 2014
Business ethics courses are closely aligned to professional conduct and might count as professionalism. On the other hand, diversity training would likely better fit the examples for business and consulting skills, which are capped at 3 CE hours annually (Section 2.2.7 and 2.2.9).
Last updated December 2014
Principle-Based Reserves (PBR) Qualifications
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.
Last updated March 2015
Qualifications for Blended Opinions
Two examples of such “blended opinions” are long-term care (LTC) opinions, which typically blend elements of life and health, and other postemployment benefits (OPEB), which often blend pension and health. A credentialed actuary who issues a blended opinion when providing Actuarial Services must satisfy the requirements contained in the U.S. Qualification Standards (USQS) as follows:
USQS section 2.3.2, Statements of Actuarial Opinion that Blend Elements of Two or More Areas of Actuarial Practice, provides the proper guidance regarding the qualifications required for an actuary to issue a blended opinion.
Section 2.3.2 acknowledges that an actuary who is fully qualified in one area of actuarial practice (for example, pension) may acquire sufficient expertise in another area of actuarial practice, namely the other “blended” area (for example, health), through continuing education (CE) provided that the CE includes material in “all areas of actuarial practice relevant to the SAO.” Each actuary must determine the chosen CE’s relevance to the area of practice. In the example mentioned in this paragraph, the actuary is expected to have sufficient CE related to health, the “blended” area of practice in the example. “Relevant” for the purpose of the USQS is defined in USQS section 2.2.7. An actuary who issues a blended opinion should ensure that some of the actuary’s CE relates specifically to the subject of the opinion.
An actuary who issues a blended opinion must be mindful of the guidance in USQS section 2.3.2, which states, “An actuary may find it prudent to work with an actuary with complementary experience and education …” An actuary who intends to issue a joint opinion with another actuary (as opposed to a blended opinion issued by a single actuary) should refer to USQS section 2.4, Statements of Actuarial Opinion Issued by More Than One Actuary. An actuary should also refer to the guidance in ASOP No. 41, Actuarial Communications, concerning responsibility for opinions.
An actuary qualified in one practice area may wish to issue a blended opinion and state reliance on an actuary qualified in the other practice area, without issuing that opinion with another actuary (joint opinions are described in USQS section 2.4). For example, in issuing an OPEB opinion, an actuary qualified in the pension area may wish to state reliance on the work performed by an actuary qualified to issue an SAO in the health area. To be the sole issuer of the SAO, the actuary issuing the SAO (in this example, the pension actuary) must be qualified to professionally assess the appropriateness of the information or results provided by the second actuary (in this example, the health actuary). In meeting the USQS requirement of at least 30 hours of annual CE, the issuing actuary must include a reasonable combination of relevant CE for all areas of the SAO (in this example, both pension and health). The issuing actuary may consider the amount and type of input received from the second actuary in deciding how much of each type of relevant CE the issuing actuary needs.
Last revised July 2018
Pricing and reserving for Long-Term Care (LTC) policies typically involve aspects of both life insurance and health insurance. An actuary may find that the initial and renewal rate filings and reserving are inter-related and may require specific actuarial opinions for LTC policies.
A credentialed actuary who issues an LTC 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
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 an SAO regarding LTC 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).
2. Consistent with Section 2.1 of the USQS, the actuary must be familiar with the Law applicable to LTC 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.
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.
6. Per USQS section 2.2, actuaries must remain “current on emerging advancements in actuarial practice and science that are relevant to the Actuarial Services [as defined in the Code of Professional Conduct (Code)] they provide.” This section involves keeping up to date on continuing education relevant to an actuary’s practice. In light of the requirements of Precept 2 of the Code and the General Qualification Standard under section 2 of the USQS, an actuary issuing an LTC-related SAO should ensure that at least some of their continuing education relates directly to LTC-related topics.
Last updated February 2017
Other
No. This provision has been eliminated from the current version of the USQS. Therefore, it is up to the individual actuary to determine whether an event he or she attends constitutes “relevant CE” under the USQS, rather than relying on a statement from the CE provider.
Last updated December 2014
If you have a question about the USQS, please forward your specific question to the Committee on Qualifications of the American Academy of Actuaries. Some questions take more time than others to answer and depend upon the availability of volunteers. We will try to answer all questions within two weeks of their submission. See http://www.actuary.org/content/qualification-standards-1.
Last updated December 2014