CIA (e)Bulletin/(e)Bulletin de l'ICA

Canadian Institute of Actuaries/Institut canadien des actuaires

February 2011
Your Institute

By Micheline Dionne, FCIA
CIA President

Much is being written these days about the future of Canada’s private and public pension plans. Canadians’ savings rate is in freefall, and a number of proposals are being advanced to either require or encourage Canadians to plan better for their retirement. But this is just one area of concern. The next big public debate will be on health. There is no shortage of information on current health care expenditures, but data on the long-term costs are scarce. And yet, a longer-range outlook would facilitate better forecasting and better planning. To that end, we will need both a macroeconomic model and better tools to assess the benefits for Canadians’ future health.

Unfortunately, too few actuaries are taking this path. Unlike the case with pension plans, the area of practice of nearly 40 percent of our members, actuaries engaged in long-range, overall health care cost projections are few and far between. In group insurance, apart from the disability field, estimates are short-term—a few years at most. Post-retirement health care commitments by employers cover a longer period, but these models are not all-encompassing. Because they do not take public plans into account, there is no reason to assess the impact of prevention programs or to include hospital costs and the costs generated by most health professionals. This absence of actuarial forecasts can be explained by the preponderance of public health plans that employ few actuaries, if any.

There are two niches available to actuaries. One is to forecast future costs according to the current consumption mode and to estimate the growth of such costs as a percentage of the gross domestic product over the coming years. The basic principle is the same as for the exercise currently being carried out by the Canada Pension Plan (CPP) or the Québec Pension Plan (QPP). It is thanks to this exercise that we are more aware of the costs and intergenerational transfers and can assess the impact of the various demographic and economic scenarios. A similar exercise could be undertaken in the field of health: it could first be carried out on a very approximate basis in order to better understand the issues in question, but also to better explain the benefits that could be generated by a more precise estimate, which would eventually come under the responsibility of the concerned governments.

Another approach would be to examine the value of certain investments in health care, such as prevention, new technologies or home care, and to understand their impact on the future costs of health care and the additional revenues generated by a healthier and, hence, more productive population.

Health is a societal issue that concerns us and that moves us to work not only for the collective good but for the good of future generations. If health care questions interest you, and if you have time to spend furthering our knowledge in this field, please contact CIA resident actuary Chris Fievoli at the following address: We are in great need of volunteers. Whether you work in the health field, are familiar with forecast and discount models or have a talent for project management, we encourage you to let us know of your interest as soon as possible.

If you have any questions or comments, please feel free to write to me at

Micheline Dionne, FCIA, is President of the Canadian Institute of Actuaries.

By Rob Stapleford, FCIA

In November 2010, the CIA Accreditation Committee updated the membership on the progress of its work and published a revised university accreditation program for review and comment. At the same time, the proposed program was sent to universities for their feedback.

Since that time, the committee has been busy reviewing the comments received and engaging in further dialogue with the universities and members through a variety of conference calls and two webcasts held in December 2010.

As a result of feedback received, the committee is considering several changes to the program. The proposed changes were discussed by the Eligibility and Education Council at its February meeting and will be considered by the CIA Board at its March 2011 meeting.

Member Feedback

We received comments from 13 members. The nature of the responses was mainly related to the process for ensuring consistency across university exemptions to ensure standards are upheld. This will be part of the important role of the Accreditation Panels and the overall Accreditation Committee in their evaluation of the university applications for course accreditation. A few members are fundamentally opposed to this initiative as they do not perceive any long-term benefits to the profession from changing its education system.

Another member concern was the future demand and supply of actuaries and whether the accreditation process will produce more actuaries than the job market can bear. One of the goals of the accreditation program is to attract even stronger candidates to the actuarial profession and this could result in more candidates. However, the committee does not think that these changes will create an imbalance in the supply and demand for actuaries. The university course exemptions will apply only to the early actuarial exams and the remainder of the qualification process remains the same. Market forces will continue to be the main driver in the supply/demand for actuaries.

A further assessment of the future demand and supply of actuaries in Canada is an important issue for the Institute and has a far broader reach than the scope of the Accreditation Committee. A new project to look at the supply of and demand for actuaries is currently being discussed by the Secretariat.

The lack of mutual recognition by the CIA’s education partners was also a concern. The Accreditation Committee shares this interest and is doing everything possible to keep the CIA’s education partners apprised of progress and actively seeking input from them to maximize the likelihood of obtaining mutual recognition for the accreditation program. Once the accreditation program has been finalized, the CIA expects that worries about diminished standards will have been addressed and that the discussion of mutual recognition can be resumed. It is the CIA’s goal to achieve mutual recognition for exam exemptions granted by the CIA with its partners in the co-sponsorship of exams. Until that time, the CIA understands that students concerned with cross-border mobility will likely elect to continue to pursue the FCIA through the traditional exam routes.

University Feedback

The majority of feedback received from the university perspective can be divided into four main categories where the Accreditation Committee is recommending changes to the program.

The first area is the role and requirements of the Accreditation Actuary (AcA); in particular, the requirement for an FCIA on staff at the university. The committee feels that allowing universities to fulfil the requirements for the AcA through a part-time or consulting role for a transitional period of up to four years initially, with annual reporting and review, will provide greater flexibility and additional time for staffing considerations. The AcA must still be approved by the Accreditation Committee. Universities also felt that it would be helpful for the CIA to have an academic route to Fellowship. A task force is looking at this, with an expected proposal to the CIA Eligibility and Education Council in July 2011.

The second area of concern for universities is the cost. Through its review, the Accreditation Committee is recommending that the one-time application fee for universities be lowered from $5,000 to $1,500. The cost to students applying for exemption from actuarial exams would remain the same as outlined in the original proposal at 80 percent of the corresponding exam fee. This pricing structure anticipates a revenue-neutral situation for the accreditation program for the first year.

The third area which was raised in universities’ comments was the ongoing partnership between the universities and the CIA. The universities suggested that an academic liaison committee be formed. This committee would report to the Eligibility and Education Council and would be comprised of representatives from accredited universities and other individuals as appropriate, to ensure ongoing dialogue between universities and the CIA. The Accreditation Committee agrees with this approach and will make the recommendation to the EEC.

Finally, the issue of timing was a concern for several universities. The Accreditation Committee feels that allowing the universities some flexibility for filling the position of Accreditation Actuary for a transitional period will reduce some of the practical concerns about timing. In January, the committee therefore decided to continue with its current mandate of accrediting universities for September 2011. However, the committee recognizes that September 2011 is an aggressive target that remains a concern to several universities. The Accreditation Committee has maintained an open dialogue with the universities and continues to assess these concerns in conjunction with its progress on accreditation. Without slowing down the work of the committee, a longer implementation period was discussed with the EEC in February and will be considered in its final recommendations on timing to the CIA Board at its meeting in March.

The Accreditation Committee thanks the members and universities who have participated in the dialogue so far, and is committed to ensuring regular communication occurs throughout the process.

Questions and comments may continue to be directed to

Rob Stapleford, FCIA, is chair of the CIA Accreditation Committee.


We are frequently urged to "go green", cutting our wasteful energy use and recycling as much as possible. Many people already live greener lifestyles than they may have done several years ago. But for those yet to alter the way they live, the Worldwatch Institute says there is an important incentive that might persuade them to change their minds: helping the environment can save you money in various ways.

Lower energy bills

  • Set your thermostat lower in the winter and higher in the summer to reduce heating and air conditioning bills.
  • Unplug appliances when you are not using them. Leaving a TV on standby, for example, still adds to your hydro costs.
  • Wash clothes in cold water if possible; as much as 85 percent of the energy used by washing machines goes to heat the water.
  • Use a drying rack or clothesline to avoid the cost of machine drying.
  • Take shorter showers beneath a low-flow showerhead, which reduces your water and heating bills.

Less money spent on gas

  • Walking or cycling to work, wherever possible, cuts your gas costs while improving your health.
  • Telecommuting, or moving closer to work, would lead to fewer or shorter journeys. Even if living nearer the office increases your mortgage, you could still save money in the long run.

Reduced shopping expenses

  • Meat eaters could add at least one meatless meal a week to their diet, as meat is expensive to buy and also has a number of environmental and health costs.
  • By using a water filter on your tap water you can avoid buying bottled water.
  • Obtain secondhand products online via sites like craigslist, kijiji or FreeSharing, or visit garage sales and thrift stores.
  • Borrow books from libraries instead of buying them, which reduces the amount of paper needed for publishing.
  • Share power tools and other appliances with your neighbours.
  • Keep your cellphone, computer and other electronics for as long as possible and do not replace them until it is necessary.
Institute News

It’s that time of year again and the CIA Elections Committee is already working hard on the 2011 Elections. This year elections are required for four Director positions (three-year terms), Secretary-Treasurer (two-year term) and President-elect (one-year term, three-year commitment). Any member who wishes to run for office as a Director, as Secretary-Treasurer or as President-elect, and who meets the nomination requirements set out in the CIA Elections Rules of Procedure, will have their name appear on the ballot.

The Elections Committee is also actively identifying and encouraging potential candidates to run. The committee encourages proportional representation by region and practice area on the Board and would like to bring to your attention a particular need for members with P&C expertise to serve as Directors to achieve proportional representation. We are particularly urging those members to participate in the election process this year.

The CIA’s future is in your hands and it is the responsibility of each of us to make our mark. This is your opportunity to serve and support your profession. Please consider standing for election and when the time comes, please vote.

If you are interested in nominating an individual or submitting your own name for this year’s ballot, please contact Lynn Blackburn at the Secretariat prior to April 8, 2011, for the necessary forms. Further information regarding the nomination requirements can be found in the Elections Committee’s approved Rules of Procedure.

This is your opportunity to serve and support your profession. For more information, contact Lynn Blackburn, director, member services and standards development, at (613) 236-8196 ext. 117 or or any of the Elections Committee:


By Jean-Yves Rioux, FCIA

Have you ever been in an elevator with someone way above you on the organizational chart when they turn to you and ask, "Precisely what is it that actuaries do?", or "What is the difference between what you do and our economists do?" These experiences can test any actuary’s mettle. You have seconds to respond, and respond perfectly as well.

The Enterprise Risk Management Applications Committee (ERMAC) thought it would be a good idea to put together ‘elevator speeches’ on ERM topics for these occasions. Such tools give your captive audience the who, what, when, where and why in a minute or, preferably, less. And they won’t only work in elevators, but at networking events, cocktail parties and even on voicemails.

Here are four the committee has come up with:

Actuaries and ERM

Actuaries are the professionals who focus on financial and risk management for retirement plans, property/casualty and life insurance companies, governments and individuals. With increasing calls for transparency and more reporting of risk being required by stakeholders, regulators and rating agencies, managing risk on an enterprise level has intensified and actuaries are well positioned to undertake the challenge.

One definition of enterprise risk management says that it is the discipline by which an organization assesses, controls, exploits, finances, and monitors risk from all sources, to increase the organization’s short- and long-term value to stakeholders. The actuarial viewpoint covers all aspects of risk management, however; the profession looks at risk from managing of the downside—minimizing loss of assets, or reducing the loss of income—and managing of the upside, that is, seeking opportunities and taking measures to increase value by strengthening the organization’s balance sheet and return on capital employed.

The deep education requirements to qualify as an actuary and the expertise actuaries acquire managing retirement plans, property/casualty and life insurance companies provide excellent experience and competence to manage other financial and non-financial organizations. Actuaries may be seen as "conservative" in their financial and risk management of these organizations; however, this attribute, supplemented by actuarial standards of practice and professional requirements, is a cornerstone of all actuarial work including enterprise risk management.

Can’t economists do the same?

Both actuaries and economists use their professional expertise and mathematical models to analyze systems and operations. The key difference is in their approach to their work. Economists look at the world from a perspective of scarce resources, while actuaries are focused from a perspective of risk.

What is ERM?

Traditional risk management focuses on operational risk assessment and the development of strategies to manage and mitigate these risks. ERM improves upon these approaches by taking (and this is critical) an enterprise-wide view of risks and by considering reduction of downside risks and the exploitation of upside opportunities. It incorporates risk culture at all levels of the organization with a view of increasing the firm’s long-term value.

ERM is a process typically launched by a board of directors that involves people at every level of an enterprise. It is designed to identify and manage potential risks across the enterprise and, if the risk does exist, ERM minimizes its impact on the organization. It’s all about gathering and organizing knowledge and using it to make confident business decisions that will increase the organization’s long-term value.

Doesn’t ERM only really apply to financial services firms?

While it is true the insurance and banking industries have practised ERM for years, so have energy and oil businesses. Now firms in other sectors are taking advantage of the opportunities delivered by ERM. Micro-insurance organizations, social housing, mining companies and public utilities are just a few examples.

Jean-Yves Rioux, FCIA, is Chair of the Enterprise Risk Management Applications Committee.

After more than a year of thought, research and consultation, the Institute will soon be launching its new website. It will have an exciting new look and feel. The search capabilities will be greatly improved. Virtually all documents will be available on the public site. The home page will display dynamic information, and members should find what they are looking for far more efficiently. An enhanced e-commerce system will be included, and will be similar to models that members have seen and used on other sites. These and many more improvements are in the works.

Websites are living entities. As soon as a site is launched, the work begins to improve it. In the CIA’s case, the site launched in October 2005 bears only passing resemblance to the one currently online. And it is used far more than ever before. For example, looking at statistics covering the same week in January in 2006 and 2011, the number of average daily sessions has risen from 920 to 2,166. The average number of bytes transferred per day has soared from 415 MB to 1.5 GB.

Over the past year, we have learned just how much web technology has changed. For example, the popular computer language we used five years ago to program the 55+ webtools on the site is slowly being replaced by other programming languages and this trend challenged the CIA to research and evaluate a number of alternatives that offer appropriate out-of-the-box functionality.

There is a trend in web design towards the use of content management systems (CMS) to modify the content of sites using a browser, rather than requiring a programmer to do the work. For example, some CIA documents are posted on three or four different areas on the current site. When one of these documents is changed, we need to go to each location and post the updated document. Of course, this has to be done on both the English and French sites. A content management system will eliminate this time-consuming process.

The core of the new website will be a publications database, where every one of our documents will be stored along with critical information about the content. Users will be able to search the database using various criteria, making more efficient use of their time.

One interesting benefit of the publications database relates to older documents which were never produced electronically. Many of these have been scanned over the years. However, the only information that search engines can look at in scanned image documents is the accession number. With the new database, much more information will be searchable, making these documents far more accessible.

Regarding CIA events, a master monthly calendar will display all events (in a calendar or list view), and provide options to filter the events by event type, location, date, etc. Of course, all events will be linked to the new e-commerce system for easy registration and payment.

We will update members on the progress in the next (e)Bulletin and will share more detailed information on some of the new exciting elements.

Stay logged in!
Registration is open for the 2011 Enterprise Risk Management (ERM) Symposium

Now in its ninth year, the premier global conference on ERM takes place in Chicago, IL, from March 14–16 and will offer:

  • Five general sessions and almost 30 concurrent sessions featuring risk management experts;
  • Seminars on hot ERM issues;
  • Networking opportunities to renew and expand your list of contacts;
  • A scientific program showcasing top brainpower in new applied research;
  • A track of sessions featuring academics presenting research from leading universities; and
  • Exhibitors demonstrating their services and knowledge.


Who should attend:
  • Actuaries;
  • Chief risk officers;
  • Chief financial officers;
  • Risk professionals;
  • Equity analysts and other investment professionals;
  • Risk modeling experts;
  • Asset liability management practitioners;
  • Anyone interested in learning more about ERM; and
  • Anyone interested in networking with their peers about recent issues and how best to manage risk.


The Swissôtel Chicago, where precise Swiss service meets American energy and European elegance, is the setting for the symposium. The room rate for attendees is $159 per night, plus tax.


Contact with Questions: Casualty Actuarial Society at

Report of the Joint CICA/CIA Task Force on Developing Non-Authoritative Guidance: CICA – CIA Guide: Audits of Financial Statements That Contain Amounts That Have Been Determined Using Actuarial Calculations

This non-authoritative guide provides information that may help auditors to understand and apply the requirements of the Canadian Auditing Standards (CAS) when conducting audits of financial statements that contain amounts determined using actuarial calculations whether or not determined by, or with the assistance of, an actuary. It was developed by a joint task force of the Canadian Institute of Chartered Accountants and the Canadian Institute of Actuaries.

The guide reflects the current professional standards for auditors, accountants and actuaries and is based on guidance contained in previously effective Assurance and Related Services Guidelines. It incorporates substantively all of AuG-43, Audit of Policy Liabilities of Insurance Companies and aspects of AuG-29, Audit of Employee Future Benefits — Defined Benefit Plans.
Contact with Questions: Mary Olynik, Principal, Auditing and Assurance Standards, at


Final Communication of a Promulgation of Calibration Criteria for Investment Returns Referenced in the Standards of Practice for the Valuation of Policy Liabilities: Life and Health (Accident and Sickness) Insurance (Subsection 2360)
The Actuarial Standards Board (ASB) is promulgating the use of the calibration criteria for equity returns. These calibration criteria are to be used for valuations on or after April 30, 2011, and early implementation is permitted.

Please read the final communication at the link below to find out more about this promulgation.
Contact with Questions: A. David Pelletier, Chair, Actuarial Standards Board, at
Final Standard of Practice – Practice-Specific Standards for Insurers (P&C Insurance) – Subsections 2260 and 2270
The attached final Standard of Practice was approved by the Actuarial Standards Board on January 17, 2011. Only minor wording changes were made to the exposure draft.
The changes affect subsections 2260 and 2270, which address margins for adverse deviations (MfADs) for property and casualty insurance. The prior Standards of Practice in subsections 2260 and 2270 did not allow for MfADs which are below the low end of the prescribed range. It was acknowledged, though, that there may be circumstances where an MfAD less than the low end of the range would be entirely appropriate. Given that the Standards of Practice were very specific in not allowing this, an actuary setting the MfAD at this level would technically be in violation of the Standards of Practice and accepted actuarial practice.
The effective date of the final Standard of Practice is January 31, 2011. Early implementation will be permitted since the guidance in subsections 1130 and 1330 currently support the selection of an MfAD below that specified in paragraph 2260.02 in unusual situations.
Contact with Questions: Jacqueline B. Friedland, Chair, Designated Group, at


Practice Education Course (PEC)
In order to obtain the Fellow of the Canadian Institute of Actuaries (FCIA) designation, all students who completed the Society of Actuaries examinations must attend and pass the PEC in order to become an FCIA.
The PEC can be taken if the candidate satisfies any one of the following conditions:
  • The candidate has credit for Courses P, FM, M and C (with full VEE), all FAP requirements (all eight FAP modules and both the interim and final assessments) and both FSA exams (N.B., FSA modules are NOT required) under the Society of Actuaries’ examination system; OR
  • The candidate has obtained his/her Fellowship designation from a recognized actuarial organization.
Please note that no exceptions will be made to the above requirements.
Registration is open for the Practice Education Course to be held from Sunday, June 5, through Wednesday, June 8, 2011 in Ottawa, Ontario.
Candidates who have satisfied the eligibility requirements should complete a registration form and return it to the CIA Secretariat along with payment of the registration fee by April 1. Registration forms and other information can be obtained on the CIA website at the link below.
Registration is on a first-come, first-served basis depending on the date of receipt of the registration form and payment of the registration fee. Candidates will generally be accepted, space permitting. However, due to size considerations, space may be limited for some practice area specialties.
Contact with Questions: Leona Campbell, coordinator, eligibility and education, by e-mail at


Presentation by Chief Actuary
A presentation by Jean-Claude Ménard, OSFI Chief Actuary, to the Society of Actuaries’ (SOA) Living to 100 International Symposium has been posted to the OSFI website. The topic is Mortality Projections for Social Security Programs in Canada and Its Implications, and it was delivered January 7, 2011 in Orlando, FL.
Contact with Questions: Office of the Superintendant of Financial Institutions at
Submission to IASB – Exposure Draft "Insurance Contracts"
The Canadian Institute of Actuaries presented its comments on the International Accounting Standards Board Exposure Draft on Insurance Contracts.
Contact with Questions: Lesley Thomson, Chair, Task Force on International Accounting and Actuarial Standards (Insurance) at


Final Standards of Practice for Capitalized Value of Pension Plan Benefits for a Marriage Breakdown (Section 4300)
The attached final Standards of Practice for section 4300 (the "final Standards") were approved by the Actuarial Standards Board (ASB) on December 21, 2010, with an effective date of July 1, 2011. Early implementation is not permitted. The final Standards replace the existing section 4300 of the ASB’s Standards of Practice.

Links: Final Standards:

Contact with Questions: Charles McLeod, Chair, Designated Group, at
Calendar of Events
March 10-11, 2011
Special General Meeting
To be decided
Ottawa, ON
June 5-8, 2011
Practice Education Course
Delta Ottawa
Ottawa, ON
June 29-30, 2011 Annual Meeting The Westin Ottawa Ottawa, ON
September 9-10, 2011
Actuarial Evidence Seminar
ITHQ - Québec Tourism and Hotel Institute
Montréal, QC
September 22-23, 2011
Seminar for the Appointed Actuary
Doubletree by Hilton - Toronto Airport Hotel Toronto, ON
November 2, 2011
Pension Seminar
Doubletree by Hilton - Toronto Airport Hotel
Toronto, ON

Additional information on all CIA meetings can be obtained at:, or by contacting Nancy Jenkinson at 613-236-8196, ext.104, or

For information on CIA webcasts, visit
Board and Council Updates

Larry Miller has been appointed Vice-chair of the Elections Committee, effective immediately.

Steve Eadie and Claude Lockhead have been appointed members of the Committee on Professional Conduct, effective immediately.
 Paul Reaburn (Chair), Malcolm Hamilton, Brian Taylor, Jacques Potvin, Minaz Lalani, Tom Walker and Bonnie-Jeanne MacDonald have been appointed to the Individual Savings and Financial Literacy Task Force, effective November 5, 2010.
Member Services Council

Lisa Miolo has resigned as Chair of the Segregated Fund Experience Subcommittee of the Research Committee, effective immediately.

Betty Ma has resigned as a member of the Committee on Volunteer Initiatives, effective immediately.

The following committees and task forces have been disbanded with thanks: Health Care Applications Committee, Pension and Social Security Liaison Committee, Task Force on Pension Plan Excess Surplus Issues and Task Force on Post-Employment Valuation Assumptions.