Casualty Actuarial Society Credentials (ACAS/FCAS) Professionalism, Online Courses, and Credentialing Requirements Syllabus

Professionalism, Online Courses, and Credentialing Requirements syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Professionalism, Online Courses, and Credentialing Requirements in Casualty Actuarial Society Credentials (ACAS/FCAS), not a summary of it.

1. 1

   Online Course 1 — Risk Management and Insurance Operations

   3 topics

   • Insurance Operations
     • Underwriting, marketing, and distribution
     • Claims handling and policyholder service
   • Risk Management Fundamentals
     • Risk identification, assessment, and treatment
     • Insurable interest and the insurance mechanism
   • Insurance Markets and Products
     • Personal and commercial lines overview
     • Reinsurance market structure
2. 2

   Online Course 2 — Insurance Accounting, Coverage Analysis, Insurance Law, and Insurance Regulation

   3 topics

   • Coverage Analysis
     • Policy structure: declarations, insuring agreements, exclusions
     • Standard ISO forms and endorsements
   • Insurance Law
     • Contract formation and interpretation
     • Tort law and liability concepts
     • Bad faith and duty to defend
   • Accounting and Regulation Basics
     • Fundamentals of insurance accounting
     • Regulatory environment overview
3. 3

   Course on Professionalism (COP)

   3 topics

   • The Code of Professional Conduct
     • Precepts governing actuarial conduct
     • Conflicts of interest and disclosure
   • Qualification and Practice Standards
     • U.S. Qualification Standards
     • Role and authority of the ABCD and ASB
   • Ethical Decision-Making
     • Resolving professionalism dilemmas
     • Communication and documentation responsibilities
4. 4

   Credentialing Pathway and Requirements

   3 topics

   • ACAS Requirements
     • Required exams (P, FM, MAS-I, MAS-II, 5, 6) and VEE
     • Online courses and Course on Professionalism for ACAS
   • FCAS Requirements
     • Fellowship exams (7, 8, 9) beyond ACAS
     • Completion of the full Fellowship pathway
   • Continuing Education and Membership
     • CAS continuing education requirements
     • Maintaining qualification to issue actuarial opinions

Professionalism, Online Courses, and Credentialing Requirements flashcards for Casualty Actuarial Society Credentials (ACAS/FCAS)

19 of 50 cards from the Professionalism, Online Courses, and Credentialing Requirements deck — real questions with worked answers.

1. In insurance operations, what are the core functions an insurer must perform to operate profitably?

   Marketing/distribution, underwriting, ratemaking, claims handling, reinsurance, investments, and actuarial/loss reserving. These functions balance acquiring profitable business, pricing it adequately, paying valid claims, and managing capital.

2. What is underwriting in insurance operations?

   The process of selecting, classifying, and pricing applicants for insurance — deciding whether to accept a risk, on what terms, and at what premium, with the goal of building a profitable book and avoiding adverse selection.

3. Define adverse selection in insurance.

   The tendency for higher-risk individuals to seek insurance more than lower-risk individuals, distorting the risk pool. Insurers counter it through underwriting, classification, and risk-based pricing.

4. Define moral hazard versus morale hazard.

   Moral hazard is increased risk from dishonest/deliberate behavior (e.g., arson for insurance money). Morale hazard is increased carelessness because one is insured (e.g., leaving doors unlocked). Both raise expected losses beyond the insured's true risk.

5. What is the law of large numbers and why is it foundational to insurance?

   As the number of independent, similar exposure units increases, actual loss experience converges to the expected value. It lets insurers predict aggregate losses accurately even though individual losses are uncertain, enabling stable pricing.

6. List the ideal characteristics of an insurable risk.

   A large number of similar exposure units; losses that are accidental and unintentional; losses that are determinable and measurable; losses not catastrophic to the insurer; a calculable chance of loss; and an economically feasible premium.

7. What are the four classic methods of risk management (the 'four T's')?

   Risk avoidance (Terminate), risk reduction/control (Treat), risk retention (Tolerate/keep), and risk transfer (e.g., insurance). Often expanded with separation, duplication, and diversification.

8. Distinguish pure risk from speculative risk.

   Pure risk involves only the possibility of loss or no loss (e.g., fire, death) and is generally insurable. Speculative risk involves the chance of loss, no change, or gain (e.g., gambling, investing) and is generally not insurable.

9. What is the difference between a peril and a hazard?

   A peril is the cause of loss (fire, flood, theft). A hazard is a condition that increases the frequency or severity of a peril (oily rags increasing fire hazard). Hazards are physical, moral, or morale.

10. Define frequency and severity in loss analysis, and give the pure premium formula.

    Frequency is the number of claims per exposure; severity is the average cost per claim. Pure premium combines them: $$\text{Pure Premium} = \text{Frequency} \times \text{Severity} = \frac{\text{Number of Claims}}{\text{Exposures}} \times \frac{\text{Losses}}{\text{Number of Claims}}.$$

11. Write the loss ratio formula and define it.

    The loss ratio measures losses relative to premium: $$\text{Loss Ratio} = \frac{\text{Incurred Losses} + \text{LAE}}{\text{Earned Premium}}.$$ It indicates whether premiums are adequate to cover claims and loss adjustment expenses.

12. Write the combined ratio formula and state what a value above 100% means.

    $$\text{Combined Ratio} = \frac{\text{Incurred Losses} + \text{LAE}}{\text{Earned Premium}} + \frac{\text{Underwriting Expenses}}{\text{Written Premium}}.$$ A combined ratio above $100\%$ means an underwriting loss; below $100\%$ means an underwriting profit (before investment income).

13. What is the difference between the standard, surplus lines, and residual (involuntary) insurance markets?

    The standard market is admitted, licensed insurers for typical risks. Surplus lines (non-admitted) cover hard-to-place or unusual risks not written by admitted carriers. The residual market (e.g., assigned risk plans, FAIR plans) covers those who cannot obtain coverage voluntarily.

14. Distinguish first-party from third-party insurance coverage.

    First-party insurance pays the insured directly for their own losses (e.g., property, collision). Third-party (liability) insurance pays others on behalf of the insured for losses the insured is legally liable for.

15. Compare occurrence-based and claims-made liability policies.

    An occurrence policy covers claims for injury/damage occurring during the policy period regardless of when the claim is reported. A claims-made policy covers claims first reported during the policy period (subject to a retroactive date), often requiring tail coverage when ended.

16. What are the main commercial property and casualty lines of business?

    Commercial property, general liability, commercial auto, workers compensation, professional liability (E&O / D&O), commercial multi-peril, inland marine, and umbrella/excess. Personal lines include homeowners and personal auto.

17. In coverage analysis, what are the standard sections of an insurance policy?

    Declarations (the 'Dec page'), Insuring agreement, Definitions, Exclusions, Conditions, and Endorsements. Analysis applies these together to determine whether a loss is covered.

18. Contrast a deductible with self-insured retention (SIR).

    With a deductible, the insurer typically pays the full claim then collects the deductible from the insured, and policy limits apply on top. With an SIR, the insured pays and administers losses up to the retention before the insurer responds; limits often sit above the SIR.

19. Distinguish actual cash value (ACV) from replacement cost.

    Replacement cost is the cost to repair/replace with new property of like kind and quality without depreciation. ACV deducts depreciation: $$\text{ACV} = \text{Replacement Cost} - \text{Depreciation}.$$

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