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NAIC Updates Appointed Actuary Requirements

The National Association of Insurance Commissioners (NAIC) has recently issued new Actuarial Opinion instructions and regulatory guidance for Appointed Actuaries writing property-casualty actuarial opinions for 2019 NAIC Annual Statements.

These changes only apply to P&C actuaries who sign actuarial opinions for the NAIC P&C annual statements.

These changes include new, accepted actuarial designation requirements, new qualification documentation and a new CAS attestation procedure. In addition, there likely will be new continuing education (CE) log requirements in 2020. Appointed Actuaries should review the NAIC Actuarial Opinion instructions and related regulatory guidance to fully understand all the changes.

Accepted Actuarial Designation

The previous definition of a qualified actuary required membership in the CAS.  The new definition requires that a qualified actuary “has obtained and maintains an Accepted Actuarial Designation.” The NAIC Actuarial Opinion instructions further define an accepted actuarial designation as meeting or exceeding the NAIC’s minimum P&C actuarial educational standards for a P&C appointed actuary.

In late 2018 and early 2019, a group from NAIC analyzed what skills appointed actuaries apply in their work. The group developed nearly 100 knowledge statements that they deemed necessary for the basic education of appointed actuaries. A team of CAS volunteers reviewed the job analysis and mapped the current exam syllabus learning objectives and readings to the NAIC knowledge statements. After discussions and a final review, the NAIC approved the following definitions as acceptable actuarial designations for CAS designations:

  1. Fellow of the CAS (FCAS) — Condition: Basic education must include Exam 6-Regulation and Financial Reporting (United States).
  2. Associate of the CAS (ACAS) — Conditions: Basic education must include Exam 6-Regulation and Financial Reporting (United States) and Exam 7-Estimation of Policy Liabilities, Insurance Company Valuation, and Enterprise Risk Management.

The above requirements will be effective for all new CAS Associates and Fellows who receive their designations in 2021 or later. Members who received their designation prior to 2021 may substitute equivalent examinations or experience or continuing education. Under the NAIC rules, actuaries who do not meet the basic education requirements are still allowed to be appointed actuaries if they can show that they have gained the knowledge by experience or continuing education. Actuaries will need to write how they obtained knowledge of the material in the qualification documentation.

In addition to the CAS designations, the NAIC also recognizes the Fellow of the Society of Actuaries (FSA) designation in the General Insurance track with credit for certain exams as an acceptable actuarial designation.

The NAIC review did find small deficiencies in the CAS syllabus on nine of the required knowledge statements; to address this, minor changes to the CAS Course on Professionalism, online courses and some examinations will be made this year.

Qualification Documentation

The new instructions require all appointed actuaries to provide a form summarizing their actuarial qualifications. This qualification document is to be supplied to the Board of Directors upon appointment and on an annual basis, either directly or through company management.

The qualification document is a detailed account of how the actuary satisfies each component of the qualified actuary definition. The document should include a brief biography and a description of how the definition of “Qualified Actuary” in the instructions has been met, including documentation of basic education, experience and continuing education. In addition, the actuary should confirm that they have obtained and maintain an accepted actuarial designation and belong to a professional association requiring adherence to the American Academy of Actuaries’ Code of Professional Conduct and U.S. Qualification Standards.

New Attestation Procedure Online

Currently, CAS members attest to having complied with CE requirements on the CAS website by choosing “I have complied.” Starting in 2020, CAS actuaries who meet the appointed actuary qualification requirements will also be able to make their attestations on the CAS website like they do for CE. The new attestation option may also be used by members who are not currently working as appointed actuaries but may in the future.

Future Continuing Education Log

The NAIC’s Casualty and Statistics Task Force (CASTF) has passed new rules for documenting CE for appointed actuaries. The NAIC is considering including these requirements with the 2020 Annual Statement Instructions and become effective at year-end 2020. The CE requirements will NOT change; appointed actuaries will still be required to meet the specific qualification standards of the U.S. Qualification Standards; however, they will have to provide more detail on the type of specific continuing education. The SOA and CAS are working to develop a new worksheet that appointed actuaries can submit to their respective organizations to document their CE. More information on these changes will be coming out later in 2020.