By Keith Passwater Chairperson, Committee on Qualifications

Back in 2008, when I joined the Academy’s Committee on Qualifications (COQ), the COQ was putting the finishing touches on a significant rewrite to the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States (USQS). And, as a result of those revisions, many actuaries began thinking more carefully about how to apply the qualification standards. As readers may recall, under Precept 2 of the Code, actuaries must perform actuarial services only when qualified to do so, but, because the work of actuaries is complex and constantly evolving, they may not always be sure that they are applying the USQS appropriately. This is why, as part of its mandate, the COQ has long responded to questions about the USQS. Section 1.5 of the USQS encourages actuaries to contact the COQ for guidance to address specific questions and concerns. Actuaries who do so will receive a thoughtful response with reference to the relevant provisions of the USQS.

The COQ has published the essential questions addressed in many of these interpretations in the Frequently Asked Questions on the U.S. Qualification Standards (FAQs). If you have a question about the USQS, your first stop should be a visit to the FAQ page. But if your situation is novel or unaddressed, you can get help from the COQ by submitting a question online.

Some questions addressed in the FAQs are fairly simple, while others involve more complex provisions dealing with emerging changes and trends in actuarial practice. In 2016, in an effort to enhance transparency and knowledge among all actuaries, the COQ published three new FAQs, which are summarized below.

FAQ 50: Long-Term Care (LTC) Qualifications. This FAQ dis-cusses the minimum qualifications necessary to issue statements of actuarial opinions (SAOs) related to LTC policies. Because pricing and reserving for LTC policies typically involve aspects of health and life insurance, the core of the COQ’s answer lies in section 2.3.2, Statements of Actuarial Opinion that Blend Elements of Two or More Areas of Actuarial Practice. For these types of blended opinions, the USQS states, an actuary meets “the General Qualification Standard if the actuary meets the basic education and experience requirement in any one area. In meeting the continuing education [CE] requirement, an actuary should include material in all areas of actuarial practice relevant to the [SAO]. An actuary may find it prudent to work with an actuary with complementary experience and education … or to obtain additional experience and/or [CE] relevant to the [SAO].” The FAQ also emphasizes that, in addition to meeting the basic education and experience requirements under USQS section 2.1, the actuary must be familiar with the law applicable to LTC. If the opinion is an NAIC Statement opinion, the actuary must also meet the requirements of section 3, including the CE requirements.

FAQ 10: Changing Practice Areas. The COQ was asked to clarify the scope of USQS section 4.1, Changes in Areas of Actuarial Practice. The COQ stated that an actuary who wishes to change practice areas must satisfy not only the CE requirements, but also the basic education and experience requirements applicable to the SAOs the actuary intends to issue in the new practice area. Does that mean that the actuary must take exams in the new practice area? Not necessarily, although an actuary may do so. Instead, the COQ states,

“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.”

An actuary should review carefully the requirements under section 2.1 (or section 3.1 for SAOs falling under the Specific Qualification Standards) with respect to the new area of practice to determine whether they have satisfied the applicable qualification standards.

FAQ 19: Experience under the Specific Qualification Standard. The COQ received a question on whether the experience needed to sign an NAIC statement must be obtained while working directly under an actuary qualified to sign that opinion. The COQ stated that the three years of experience must have been “under review” by an actuary who was qualified to issue the SAO at the time the review took place under the standards in effect at the time, but that there is no requirement to work “directly under” the qualified actuary, nor is it necessary for the reviewing actuary to have actually issued the opinion. The qualified actuary must have reviewed the actuary’s work and must have been appropriately qualified “at the time the review took place.”

Because actuarial work is typically provided in dynamic and changing circumstances, the COQ was given the ability to provide the means for the interpretation of the USQS in new situations and a platform for dialogue between the COQ and practicing actuaries. The COQ is pleased to provide practicing actuaries with this sup-port. And, through the FAQs, the COQ makes several useful interpretations of the USQS publicly available, as we did in 2016 and plan to continue to do so in the future.

(Featured in the January 2017 Actuarial Update.)