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CERA: (Out) running the risk: the Society of Actuaries develops a gold-standard designation for ERM professionals.


Since 1949, the Illinois-based Society of Actuaries, the largest domestic professional organization of its kind, has been a beacon for the insurance industry. SOA-sponsored education and certification programs have benefited insurers by conferring excellence in underwriting. SOA-certified designees have given insurers in the United States and Canada the skills needed to recognize, quantify and manage risk.

Its newest designation, Chartered Enterprise Risk Analyst, introduced in mid-2007, is the latest extension of the idea that risk is a constant threat to all companies, large and small. Risk can morph like a virus--witness "collateralized debt obligations," the investment vehicle that contributed to the current economic downturn.

The CERA is the culmination of an idea that current SOA President Mike McLaughlin brought to then-chief Harry Panjer several years ago. McLaughlin sensed an opportunity for the society to offer a gold-standard certification in enterprise risk management principles. There were plenty of crises that the designation could be built from--the savings and loan crisis of the 1980s; the 1998 Russian credit crisis; hurricane disasters; and the Sept. 11 attacks.

Creating the designation began in earnest in 2005, McLaughlin said. A working group was organized to develop the advanced financial economics and other criteria that would lead to certification. By mid-2007, the program was ready.

With 639 of the designations awarded in the United States, the organization has taken the designation global through the auspices of the 115-year-old International Actuarial Association, headquartered in Ottawa. Already, the SOA and 13 other actuarial organizations in 12 countries, including Japan, France, Sweden, Canada and Mexico, signed a treaty recognizing CERA as the global benchmark for achievement in risk management.

"Later this year another 14 or 15 (organizations) will apply to join the group, which will make 28 or 29 groups around the world," McLaughlin said.

Actuarial groups in the United Kingdom, the Netherlands and Australia, as well as the Casualty Actuarial Society, plan to begin issuing the group's licensed version of the designation this year to its members who have completed the study regimen, he said.

About 70% of the group's membership is in the United States; 18% in Canada; and 12% comes from everywhere else, including a big group from China. "Internationally, we're growing a bit faster than in the U.S. Increasingly the SOA views itself as a player internationally," he said.

Any organization that wants to offer the CERA has to adhere closely to the SOA's standards. That process includes an initial review and subsequent periodic reviews as to the quality of the teaching, education and quality of candidates in order to maintain the rigorous standards globally. "We are not going to rubber stamp CERA. It's not an overnight pursuit. For a new candidate, it's probably a three- to four-year pursuit," McLaughlin said.

The goal is to award 2,000 CERA designations by 2012, to meet the demand for qualified risk managers in the global economy.

To promote the value of the designation, the SOA initiates frequent dialogues with a number of top employers."We're getting information from employers, and we're providing information to employers about CERAs--what they're taught to do and the value that they can bring. We're going to increase the supply of CERAs. There's no question that we'll be in the multiple thousands of CERAs and that's what we think we need to meet the demand out there of employers who want this level of rigor and training."


He believes the designation has value beyond the financial services sector into retailing, manufacturing, energy and transportation.

The rollout of the designation was followed by the financial crisis of 2008. "I think our timing was actually good because we introduced the CERA credential sort of just in time to try to help deal with the crisis," McLaughlin said. "The crisis has proved that we need more people trained, more people thinking, more people quantifying risk so that we can avoid some of this, ff we're intelligent."

* The Situation: The Society of Actuaries has been internationally recognized for its achievements in the science of underwriting risk.

* The News: The SOA has introduced the CERA professional designation, which identifies high-caliber risk management professionals.

* The Next Step: The Society has signed treaties with actuarial groups in 12 countries and more are on the way. Emphasis on Learning

If you want something done right, do it yourself. That's the idea behind the American Institute for Chartered , Property and Casualty Underwriters' December 2009 acquisition of Connecticut-based CE (Continuing Education) University, an online school for insurance professionals wishing to keep their industry knowledge at its peak.

Better known as the MCPCU, or simply "The Institutes," the organization has, for years, offered professional designations for agents, brokers, adjusters and insurance executives. The coursework leading to a credential is rigorous and takes time, but that's why an Institutes-conferred designation is considered so prestigious, AICPCU President and Chief Executive Peter L. Miller noted.

He said the nonprofit organization, which is funded by insurers, is "charged with providing knowledge and value to all parts of the industry."

But, he said, something was missing after candidates earned their new stripes. Many credentials require insurance people to take annual continuing education classes to keep their designations current.

"Our feeling was that there were a lot of CE providers, frankly, that did not provide high-quality educational content," Miller said. "We felt that by getting into the CE market, we could add value to the industry ... so that people who needed CE can actually learn something instead of just checking off that they had done that task."

The organization went ahead with the purchase of primarily because of its established online presence, and because Web-based self-study "is a growing part of the CE markets" he said. Another factor was the rising cost of CE from some other outlets. "You can go to a resort somewhere and get CE and that's pretty expensive," Miller said. "And oftentimes, frankly, I'm not clear about the quality" of what's being taught.

By offering courses online, "the value proposition and cost-benefit goes up enormously and that's what CEU does" for the Institutes.

He said has been integrated into AICPCU and so far is well-received by clients. Miller said the most popular courses have been in ethics and claims, and the Institutes has plans to expand the curriculum in the near future.

"We have a huge database of content and we can transform that into a CEU delivery system so that it makes sense for a person who wants content specifically for CE," he said.

He also said theAICPCU can now offer more variety of subjects through and the content can be customized to the length of time candidates need to meet their continuing education requirements.

The subjects offered will appeal to seasoned, credentialed insurance people as well as to younger, career-minded individuals pursuing their first designation. Miller said the most promising areas for those who are relatively new to the field include claims, commercial underwriting especially on large accounts, IT and marketing. And for agents, "adding value (for customers) through relationship-building and helping them navigate an insurance contract and what that means--I think there's always a need for that."

He urged agents to master their insurance product knowledge and communications skills. Agents who connect with customers "in a way they can understand it, is pretty crucial, because the insurance contract is not simple."

* The Situation: The Society of Actuaries has been internationally recognized for its achievements in the science of underwriting risk.

* The News: The SOA has introduced the CERA professional designation, which identifies high-caliber risk management professionals.

* The Next Step: The Society has signed treaties with actuarial groups in 12 countries and more are on the way.
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Title Annotation:Agent/Broker: Professional Designationsd; Enterprise resource planning; Chartered Enterprise Risk Analyst
Comment:CERA: (Out) running the risk: the Society of Actuaries develops a gold-standard designation for ERM professionals.(Agent/Broker: Professional Designationsd)(Enterprise resource planning)(Chartered Enterprise Risk Analyst)
Author:Gorski, Dennis
Publication:Best's Review
Geographic Code:1U3IL
Date:May 1, 2010
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