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The Actuary The magazine of the Institute & Faculty of Actuaries

Qualifying as a GI actuary

In the United States, there are two different actuarial societies the Society of Actuaries (SoA), which mainly focuses on pensions, life insurance, and investments, and the Casualty Actuarial Society (CAS), which focuses on general insurance. The CAS was formed in 1914 to solve the growing and complex issues surrounding workers’ compensation in the US, and it is the sole actuarial society in world that focuses only on general insurance.
This article outlines the process of qualifying with the CAS, comparing it with the UK system.

Exam structure
There are nine exams in all. The first four exams, which are held jointly with the SoA, cover the fundamentals of actuarial science. The later exams, numbers 5 to 9, contain the essential practical elements of the application of actuarial science in general insurance. CAS has two exams dedicated to product pricing part 5 (basic primary insurance pricing) and part 9 (advanced pricing). Part 6 covers claims reserving, reinsurance, and basic accounting. Advanced accounting and US insurance law and regulation are covered in part 7. Part 8 covers investments and finance.
The CAS syllabus for parts 5 to 9 is very detailed. This is made even harder by the fact that students must master the voluminous syllabus usually in a very short period of time.
There are two CAS professional qualifications. An associate of the CAS (ACAS) is someone who has successfully completed exams 1 to 7. A fellow of the CAS (FCAS) is someone who has completed exams 1 to 9. An ACAS in the US is empowered to certify claim reserve opinions.
As in the UK, there are two sessions of CAS exams per year. However, each of papers 5 to 9 is only examined in one of the two sessions. Parts 5, 7, and 8 are held in May, and parts 6 and 9 are held in October. Parts 1 to 4 are examined twice a year.

Exam format
Each of parts 5 to 9 consists of three sections section I generally consists of true and false questions, section II is made up of multiple-choice questions, and section III consists of short answer questions. Usually 30% of the marks are allocated to each of sections I and II and the remaining marks to section III.
The CAS has introduced a negative marking policy for sections I and II. For true and false questions the point value of the question (usually half marks) is deducted for each incorrect answer. For multiple-choice questions usually a quarter mark is deducted for each incorrect answer. Nothing will be added or subtracted for each true and false and multiple-choice question left blank.

The exam results are normally published eight weeks after the exams. At first, the candidate numbers of the successful candidates are published. The names of the successful candidates are usually published several weeks after the results are published. Unlike in the UK, the CAS does not give a firm date regarding the publication of the results, but over the years the students can normally expect the results to be published eight weeks after the exams.
The pass rates are usually low for parts 5 to 9. This issue is discussed actively by students and the members of the society. The pass rates for exams 5, 7, and 8 at the sitting in May 2001 were between 30% and 39%.

Exam preparation, like most other things, has been affected by the use of the Internet. The CAS student discussion forum has become a vital source of information exchange amongst the students, not only related to CAS examinations but also to much wider issues affecting the profession.
In preparation for the examinations, students are encouraged to attend residential revision seminars. These courses are administered by several different education companies and are given in block days normally a month before the exams, in major cities throughout the US.
The amount of study support available to students varies by company. Most companies provide financial support for examinations and seminars. A typical study leave policy could allow 100 hours of study time per exam.

Judging by the number of CAS actuaries working in the London market (more than 50) and other European cities, the CAS qualification has become one of the acceptable qualifications for general insurance actuaries in Europe.
Although the CAS exams are very US-specific, they can be of great benefit to both general insurance students and qualified actuaries in the UK. They cover more detail than the UK general insurance syllabus, and can be particularly helpful in understanding the US coverages that are reinsured in the London market!