SOA - Examination and Other Requirement Details

Examination and Other Requirement Details

Group and Health Company/Sponsor Perspective (CSP) Exam Spring 2007

This examination consists of six hours of written–answer questions. A read–through time will be given prior to the start of the exam, 15 minutes in the morning session and 15 minutes in the afternoon session.

Learning Objectives:

1. Analyze quality measures and their importance to various stakeholders
   1. Medical
   2. Dental
   3. Group life
   4. Disability income
   5.  Long–term care
   6. Flexible benefit
   
   Relates to claim management and quality of the health care provided but from the company perspective–i.e. their responsibility
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1. Identify stakeholders
   2. Describes impact of quality measures and how used by the stakeholders
   3. Describes impact of the use of quality measures on the overall healthcare system.
   4. Describes cost vs. benefit trade–offs of quality measures.

   5. Describe parameters that define consumer perception of quality

   6. Lists common quality measures and pros and cons of each

   7. Determines benefits and cautions for using a particular measure in a given scenario.

   8. Identify sources/ratings used to evaluate the financial stability of an insurer/sponsor
      
      
2. Typical markets: Understands customer segments and how products 
   are marketed to each.
   
   Learning Outcomes:
   The candidate will be able to:
   
   
1. Compares group vs. individual product vs. government financed markets
   
   
2. Describes common marketing channel to each major customer segment.
   
   
3. Describe the effect of the distribution channel on pricing and underwriting
   
   
4. Compare the relationship between different marketing channels and the underlying needs of the consumers.
   
   
3. Legal requirements: Recalls regulatory limits on marketing healthcare products.               
   
   Learning Outcomes:
   The candidate will be able to:
   1. Identifies major regulations concerning healthcare marketing.
      
      
   2. Describes impact on market of specific regulations.
      
      
4. Formulate and evaluate insurer claim reserving techniques      
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1. Describe the types of claim reserves (e.g., due and unpaid, ICOS, IBNR, LAE, PVANYD)
   2. Explain the limitations and applications of the various valuation methods  
      1. Lag methods
      2. Tabular methods
      3. Case reserves
      4. Loss ratio methods
         
         
   3. Calculate appropriate claim reserves given data
   4. Identify adjustments to IBNR (margins, trend, seasonality, claims processing changes, etc.) ?
   5. Evaluate data resources and appropriateness for calculating reserves
   6. Test adequacy of the reserves vs. actual claims experience
      
      
5. Formulate and evaluate insurer reserving techniques for other liabilities
   
   Learning Outcomes:
   The candidates will be able to:
   
   
   1. Describe different types of reserves and explain when each is required
   1. Absorb deficiency reserves,
   2. Active life reserves,
   3. Premium reserves,
   4.  Deferred acquisition costs
   5. Claim administration expense reserves,
   6. Provider liability
   2. Calculate the reserve given data
   3. Demonstrate adequacy of the reserve
      1. Gross premium valuation
      2. Asset adequacy analysis
         
         
6. Evaluate financial performance measures for companies and plan sponsors
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1.  Assess key financial measures used by various entities (insurers, HMOs, provider–owned plans)
   2. Project financial outcomes and recommend strategy to management to achieve financial goals

   3. Compare key differences and similarities in measures by accounting basis (statutory, tax, GAAP)

   4. Recommend measures for long versus short tail products
      
      
7. Integrate reinsurance arrangements with overall financial strategy 
   of company plan/sponsor
   
   Learning Outcomes:
   The candidate will be able to:
   
   
   1.  Analyze the key risks that reinsurance will stabilize for a company’s given line of business
   2. Recommend a type of reinsurance for a given scenario
   3. Assess the financial impact reinsurance has on the ceding company and reinsurance company in a given scenario
   4. Propose key considerations for a self–funded employer considering stop–loss coverage on a group health plan
      
      
8. Evaluate the impact of taxation on company/plan sponsor financial managemen
   
   Learning Outcomes
   The candidate will be able to:
   
   
   1.  Assess the tax advantage of flexible benefit offerings from a plan sponsor perspective
   2. Understand the tax implications and strategic differences among Consumer Directed Plans as well as HSA’s, MSA’s and HRA’s.

   3. Construct a model illustrating the impact of tax reserves on a LTC carrier’s cash flow

   4. Explain malformations of the market generated by tax policies
      
      
9. Evaluate the impact of regulation on company / plan sponsor financial management
   
   Learning Outcomes:

   The candidate will be able to:

   1. Evaluate the interrelationship of state versus federal regulation on company financial management
   2. Compare the primary federal regulations with which an employer must comply when offering flexible benefit plans
   3. Assess the impact on financial management of a given regulation
      
      
10. Evaluate the risk profile of a portfolio of products
    
    Learning Outcomes
    The candidate will be able to:
    
    
    1. Describe the type and magnitude of risks inherent in various products and market segments

    2. Develop a portfolio of products to manage the overall risk to a company / plan sponsor

    3. Calculate risk adjusted returns and economic value added for separate products within the portfolio
       
       
11. Evaluate financial impacts of book of business risks to an insurer, provider, and/or employer of various portfolios of products
    
    Learning Outcomes:
    The candidate will be able to:
    
    
    1. Describe book of business level risks and common actions to mitigate
    2. Determine if a given risk is present in a model scenario
    3. Construct a model to quantify the net impact of major health / morbidity / mortality risks on an insurer
       
       
12. Complete a capital needs assessment
    
    Learning Outcomes:
    The candidate will be able to:
    
    
    1.  Calculate capital needs for a given insurer
    2. Assess capital needs against assets
    3. Determine actions needed to address issues identified by assessment
    4. Understand key elements of NAIC RBC model
       
       
13. Complete an actuarial opinion
    
    Learning Outcomes:
    The candidate will be able to:
    
    
    1.  Describe applicable ASOP’s and regulations
    2. Describe components of an opinion and memorandum for a given insurer
    3. Develop documentation for an opinion
    4. Discuss communication and implications of an opinion
    5. Discuss approaches to deal with obstacles to producing an unqualified opinion
       
       
14. Understand an actuarial appraisalE
    
    Learning Outcomes:
    The candidate will be able to:
    
    
    1. Describe applicable ASOP’s and other guidelines
    2. Describe components of an actuarial appraisal
    3. Describe an approach for preparing and actuarial appraisal
    4. Describe risks associated with interpreting an actuarial appraisal
       
       
15. Demonstrate an understanding of the requirements regarding retiree life and health benefits
    
    Learning Outcomes:
    The candidate will be able to:
    
    
    1. Determine appropriate baseline assumptions for benefits and population
    2. Project future retiree benefit costs
    3. Describe principles outlined in ASOP #6
    4. Describe funding alternatives for retiree benefits

Textbooks for Group and Health CSP Examination

Handbook of Employee Benefits, Rosenbloom, J.S., Sixth Edition, 2005, McGraw Hill,
Chapters 4, 9, 39, 41, 43, 45

Enterprise Risk Management: From Incentives to Controls, Lam, J., 2003, John Wiley and Sons, Chapters 4, 8, 9, 15

Group Insurance, Bluhm, W. F., Fourth Edition, 2003, ACTEX, Chapters 1, 2, 14–21, 38, 39, 41

Individual Health Insurance, O’Grady, F., 1988, SOA, Chapters 5, 8, Appendix 1, Appendix 2

Managed Health Care Handbook,  Kongstvedt, P.R., Fourth Edition, 2001, Aspen Publishers, Chapters 41, 42, 48 (exclude appendix),69

Retiree Group Benefits, Yamamoto, D., 2007, ACTEX, Chapters 7, 8, 9 and Appendix F

U.S GAAP for Life Insurers, Herget, T., Second Edition, 2006, SOA, Chapters 1, 10,  and Chapter 12, Section 12.1 only.

Analysis for Financial Management and Standard and Poor’s Educational Version of Market Insight, Higgins, R.C., Eighth Edition, 2004, McGraw Hill/Irwin, Chapters 1, 2

The following textbooks are covered in the syllabus but may be available as study notes, check this page for updates.

Canadian Handbook of Flexible Benefits, 1996, Second Edition, John Wiley & Sons,
Chapter 9: GH–C116–07

Dynamic Financial Condition Analysis Handbook, 1996, SOA,
Chapters 1, 2, 5, 6: GH–C112–07

Insurance Industry Mergers and Acquistions, Toole, J., Herget, T., 2005, SOA,
Chapter 4: GH–C104–07

Group and Health CSP Exam Online Readings

The Online readings listed below are part of the required Course of Reading for this Exam. These readings are articles that are available online from the SOA, CCA, CIA, AAA and the ASB.

• Asset Adequacy Analysis Practice Note, December, 2004, Academy of Actuaries, pp. 1–7, 10–17, 62–66.  
• ASOP 5, “Incurred Health and Disability Claims”, December 2000, ASB   
• ASOP 7 “Analysis of Life, Health, or Property/Casualty Insurer Cash Flows”, June 2002, ASB  
• ASOP 8 “Regulatory Filings for Health Plan Entities, December 2005, ASB  
• ASOP 18 “Long Term Care Insurance”, January 1999, ASB  
• ASOP 22 “Statements of Opinion Based on Asset Adequacy Analysis by Actuaries for Life or Health Insurers” September 2001, ASB  
• ASOP 23, “Data Quality”, December 2004, ASB  
• ASOP 25 “Credibility Procedures Applicable to Accident and Health, Group Term Life, and Property/Casualty Coverages”, October 1996, ASB, pp. 1–5.  
• ASOP 42 “Determining Health and Disability Liabilities Other Than Liabilities for Incurred Claims”, March 2004, ASB  
• “The Impact of Consumer–Driven Health Plans on Health Care Costs: A Closer Look at Plans with Health Reimbursement Accounts”, January 2004, AAA Public Policy Monograph  
• “Life Insurance Earnings and the Release from Risk Policy Reserve System”, Financial Reporting Section Monograph  
• “Economic Value–Added for a Life Insurance Company”, Financial Reporting Section Monograph  
• “Health Valuation Actuary”, RSA 17, No. 3B, pp. 1359–1375  
• “Cash Flow Testing as a Management Tool”, RSA 19, No. 3, pp. 1711–1724  
• “The Practical Application of Risk Analysis Techniques in Health Insurance”, RSA 9, No. 4.  
• “Required Surplus for the Insurance Risk for Certain Lines of Group Insurance”,
  TSA XXXVI  
• “Pricing in a Return–on–Equity Environment”, TSA XXXIX, pp. 257–271,  
• “Reserving Challenges for Consumer–Directed Health Products“, Health Section News, October 2004.  
• “Relationship of IRR to ROI on a Level Term Life Insurance Policy”, Financial Reporter, Issue 50 September 2002.  
• “A New Perspective on Risk Management: Creating Value by Managing Risk”, Financial Reporter, No. 48 December 2001.  
• “Why More USA Life Insurance Companies Are Considering Economic Value as an Additional Internal Accounting System”, Financial Reporter, No. 48, December 2001.  
• “Measuring Financial Risk: The Layperson’s Introduction to Value at Risk”, Risk and Rewards, No. 30 March 1998.  
• “Value–at–Risk–An Overview (Part Two of Two)”, Financial Reporter No. 39 May 1999.  
• “Taking a Closer Look at Enterprise Risk Management”, Health Section News, August 2005.  
•  “Enterprise Risk Management”, Health Section News, January 2006.    
• “Dynamic Capital Adequacy Testing–Life and Property and Casualty”,
  (June 1999) CIA  
• “Standards of Practice–Practice–Specific Standards for Insurers”, CIA, Sections 2100 & 2300 August 2005.  
• “Read.  Think.  Write.  The Statement of Actuarial Opinion for the Health Annual Statement”, Health Section News, October 2004.  

Group and Health CSP Study Note Listing

The study notes listed below are part of the required Course of Reading for this exam. These Study Notes are not available electronically and must be ordered by using the
Study Note Information Form  located on the Study Note Information Page. Candidates should be sure to check this site periodically for additional corrections or notices.