Perspectives From the ABCDprofessionalismUp To Code

Beyond the Credential

Beyond the Credential

By David Kausch

“NO MORE EXAMS!” AISHA EXCLAIMED. Aisha was celebrating her success with a credentialled actuarial coworker, Bailey, over lunch. Aisha was especially glad that she no longer had to tell friends and family that she was still taking actuarial exams. “Finally! I finished my actuarial exams and now my credential is right around the corner! I’m done, right?”

“Congratulations, Aisha!” said Bailey. “But are you done? Yeah, no.”
Aisha blinked. “What do you mean, no?”

“Well, there’s always more to learn,” said Bailey. “You’ve gained actuarial expertise through exams. That’s fantastic—and valuable! But remember that people rely on us. We have responsibilities to them … and to our profession.”

“Well, sure,” said Aisha, “but that’s just an ideal, right? It’s not like that’s a written rule.”

“Actually, it is!” replied Bailey.

Code of Professional Conduct

Bailey told Aisha about the Code of Professional Conduct (Code), adopted by the five U.S.-based actuarial organizations, which outlines what it means for an actuary to act as a professional.

“The Code has 14 Precepts,” began Bailey, “and as to an actuary’s responsibility to the public, that issue comes first.”

Precept 1. An Actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession’s responsibility to the public and to uphold the reputation of the actuarial profession.

“Wow, so it really is written down,” said Aisha. “That makes sense. But I’ve demonstrated my technical ability, so I’ve proven I can do anything actuarial now, right?”

“Let’s look to the Code,” said Bailey.

Precept 2: An Actuary shall perform Actuarial Services only when the Actuary is qualified to do so on the basis of basic and continuing education and experience, and only when the Actuary satisfies applicable qualification standards.

“I’m almost afraid to ask,” said Aisha, “The ‘applicable qualification standards’ are written down too, aren’t they?” “You guessed it,” replied Bailey, “Bring on the U.S. Qualification Standards!”

Qualification Standards

Bailey introduced Aisha to the U.S. Qualification Standards (USQS).

Bailey continued, “The USQS, as promulgated by the American Academy of Actuaries, are for actuaries issuing statements of actuarial opinion in the United States. They are applicable to actuaries who are members of any of the five U.S.- based actuarial organizations that have adopted the Code. As mentioned, Precept 2 of the Code reminds actuaries of their duties to perform actuarial services only when they are qualified to do so. The purpose of the USQS is to provide guidance to actuaries so that they can determine whether they are qualified to issue statements of actuarial opinion.” Aisha retorted, “The way that you say ‘statement of actuarial opinion’ makes it sound like something official.”

“It is!” replied Bailey.

“For purposes of the USQS,” she continued, “a Statement of Actuarial Opinion is an opinion expressed by an actuary who is subject to the Code, where such opinion is expressed 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 Actuarial Standards Board sets standards for appropriate actuarial practice in the United States through the development and promulgation of actuarial standards of practice.

“Actuarial Services are defined in the Code as professional services provided to a principal 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.

“The point is that your opinion—your actuarial opinion—matters! It also goes back to the issue of trust. We want people to trust our actuarial opinions, and this is how we earn—and keep—that trust.” Bailey went on to outline the USQS requirements to Aisha.

“There are General Qualification Standards and Specific Qualification Standards. The General Qualification Standards include a basic education and experience requirement, as well as a continuing education requirement. Getting your actuarial credential is the first step in satisfying the basic education and experience requirement,” said Bailey. “You also need to have three years of responsible actuarial experience and have knowledge about applicable U.S. law. Furthermore, you must have subject area knowledge[1]edge either with a fellowship designation in the subject or a minimum of three years of experience in the subject under the review of a qualified actuary.”

Bailey continued, “I’m happy to mentor you in our subject area to help you satisfy the basic edu[1]cation and experience requirement. We both will benefit from you being qualified.”

“Thank you,” said Aisha. “That means a lot. What about the continuing education requirement?” “For the continuing education requirement,” began Bailey, “actuaries are required to complete and document at least 30 hours each calendar year of relevant continuing education. At least 3 hours must be on professionalism topics, at least 1 hour must be on bias topics, and no more than 3 hours may be on general business skill topics. Moreover, at least 6 hours must be organized activities such as conferences, seminars, and webcasts. Oh, and an hour is defined as 50 minutes.

“There is other guidance as well for Specific Qualification Standards and things like changing practice area,” Bailey continued.

“I’m going to guess that professionalism topics include things like the Code, right?” Aisha asked.

“Yup,” said Bailey, “and the actuarial standards of practice. Did I mention those yet?”

“There’s more?” cried Aisha.

“Uh-huh,” continued Bailey, “let’s go back to the Code.”

Precept 3: An Actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice.

“The Actuarial Standards Board sets standards for appropriate actuarial practice in the United States through the development and promulgation of actuarial standards of practice (ASOPs). These ASOPs describe the procedures an actuary should follow when performing actuarial services and identify what the actuary should disclose when communicating the results of those services.

“The ASOPs are great tools,” continued Bailey. “Personally, I look to them regularly—which is important because they are updated from time to time. It’s important to stay current.”

“What about the qualification standards, do they change?” asked Aisha.

“It’s funny that you ask,” said Bailey, “they just changed relatively recently. In November 2021, the USQS were updated effective January 1, 2022. Remember that continuing education requirement for 1 hour on bias topics? That’s new.”

“Tell me more,” said Aisha.

“Bias topics,” said Bailey, “include content that provides knowledge and perspective that assist in identifying and assessing biases that may exist in data, assumptions, algorithms, and models that impact actuarial services. Biases may include but are not limited to statistical, cognitive, and social biases.”

“That sounds timely,” said Aisha. “That gets me thinking that the USQS can’t possibly cover everything. New areas of practice are emerging for actuaries all the time. For example, I’m really interested in artificial intelligence and large language models. The USQS can’t possibly cover those. Do the USQS get updated every time something new comes along?”

“Great question,” said Bailey, “and the Code already addresses that! Some Precepts in the Code have additional Annotations. Precept 2, which requires us to satisfy the USQS, has an Annotation on that question.”

Annotation 2-2. The absence of applicable qualification standards for a particular type of assignment or for the jurisdictions in which an Actuary renders Actuarial Services does not relieve the Actuary of the responsibility to perform such Actuarial Services only when qualified to do so in accordance with this Precept.

“Thank you for sharing all this,” said Aisha, “this gives me a lot to think about.”

“My pleasure,” said Bailey, “but don’t just rely on me! You can read the USQS yourself. In fact, you have to.”

Precept 2, Annotation 2-1. It is the professional responsibility of an Actuary to observe applicable qualification standards that have been promulgated by a Recognized Actuarial Organization for the jurisdictions in which the Actuary renders Actuarial Services and to keep current regarding changes in these standards.”

“OK, I get it. It’s on me,” said Aisha, “and here I thought I was done.”

 “Passing your exams and getting your credential are great achievements, Aisha,” said Bailey. “Not everyone gets this far. You should be proud. You’ve arrived. But you need to be aware of your ongoing responsibilities regarding professionalism. This is what it means to be an actuary. And you have a great career ahead of you.”

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