October 3, 2014

Dear Academy Member:

What is the purpose of this email?
I have heard from many of you voicing much confusion about recent statements that one credential can qualify an actuary to practice in any practice area. I want to give our views on the qualification requirements in the U.S. for all our members.

In what we understand to be an unsolicited e-mail sent to thousands of property and casualty actuaries credentialed by the CAS, the SOA stated that “By becoming a member of the SOA, you will gain the career flexibility that SOA membership provides—ease of movement from one area of practice to another without replacing credentials.”

As it applies to the U.S. Qualification Standards (USQS), we do not believe this statement to be correct. The requirements set forth in the USQS are fairly explicit about changing practice areas. Below is our understanding of the USQS on this matter.

What is the relevance of the actuary’s credential under the USQS in changing practice areas?
Obtaining basic education (and first credential) is the first element of becoming qualified to issue Statements of Actuarial Opinions (SAOs)* in the U.S.; however, there are other important components of qualification under the USQS. After an actuary completes his or her basic education, he or she may be qualified in the practice area (life, health, pension, property & casualty) in which he or she earned the initial credential and obtained three years of responsible actuarial experience. 

If, however, the actuary wishes to change practice areas, and does not want to spend years re-earning his or her basic education in another area of practice, the actuary may change practice areas IF he or she follows the USQS requirements, which are largely based upon the experience he or she acquires under the review of an actuary qualified in the new practice area.

*Reminder: In the USQS, an SAO “is 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.” Statutory SAOs, those prescribed by laws, rules, or regulations, have additional credential requirements. For example, see Section 3 of the USQS.

Under the USQS, what does this mean if an FCAS credential holder, for instance, wants to change his or her practice from P&C to health?
As an example, if an FCAS wishes to change practice areas from P&C to health and become qualified to issue SAOs in the health area, then under the USQS he or she needs to obtain one year of responsible actuarial experience in health, under the review of an appropriately qualified (health) actuary. After that, and presuming the actuary has earned the appropriate annual CE, he or she has satisfied the minimum qualifications necessary under the USQS to issue health SAOs. The actuary does not need another credential.

So, is it correct to say that, under the USQS, the requirements for changing practice areas are the same regardless of whether the credential held was earned from the SOA or the CAS?
Yes. Under the USQS, for example, if an FSA wanted to issue P&C SAOs, he or she is not required to take courses and pass exams with the CAS. Instead, the USQS permit an actuary with an FSA to become qualified by obtaining one year of responsible actuarial experience in P&C, under the review of an appropriately qualified (P&C) actuary, and again meeting the annual CE requirements. If those two conditions are met, the actuary would then meet the minimum qualifications to issue P&C SAOs. (See Section 3 of the USQS for specific requirements for NAIC statutory annual statement opinions.)

Under the USQS, how does an FSA credential holder, for example, change his or her practice area from life to health?
Under the USQS, the process for an FSA credential holder to change his or her practice area from life to health is exactly the same as outlined above for an FCAS credential holder. He or she needs to obtain one year of responsible actuarial experience in health, under the review of an appropriately qualified (health) actuary. After that, and presuming the actuary has earned the appropriate annual CE, he or she has satisfied the minimum qualifications necessary under the USQS to issue SAOs in the health area.

To be clear, if I am a holder of one credential, are the requirements to change practice areas different if I also obtain a different credential?
Not under the USQS. Any actuary, regardless of credential, must follow the USQS to be qualified to issue SAOs in another practice area—namely, for a Fellow, obtaining one year of responsible experience in the new practice area under the review of an appropriately qualified actuary in that new practice area, and obtaining the necessary annual CE to be qualified. You will not be automatically qualified by virtue of having a different credential. You must meet the USQS.

Where can I find more information about the Qualification Standards?
Read the Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States (promulgated by the American Academy of Actuaries).

For a quick reference on the USQS requirements, see this infographic.

If you have general questions about the Qualification Standards, please refer to the frequently asked questions (FAQ) page on our website.

If you have specific questions about the USQS use this form.

Tom Terry
President
American Academy of Actuaries