University Senate                                                          Proposed: November 17, 2005

                                                                                    Adopted:

 

 

RESOLUTION TO ESTABLISH THE MASTER OF SCIENCE DEGREE

IN ACTUARIAL SCIENCE

 

 

WHEREAS    the Education Committee has favorably reviewed a proposal from the School of Continuing Education to establish the MS in Actuarial Science, and

 

WHEREAS    the existing master’s degree in statistics does not fully meet the needs of the growing discipline of actuarial science, and

  

WHEREAS    the proposed program offers practical preparation for the actuarial profession, and

 

WHEREAS    leaders of the actuarial profession are encouraging development of university-based training, and

 

WHEREAS    there is no question that actuarial science is a legitimate discipline of study as reflected by comparable programs at peer institutions;

 

THEREFORE BE IT RESOLVED              that the School of Continuing Education be authorized to offer the MS in Actuarial Science, and

 

BE IT FURTHER RESOLVED       that the Senate forward this resolution to the Trustees for appropriate action with the proviso that this Committee will review the program in five years.

 

 

                       

                                                                                                Proponent:

 

 

                                                                                                Committee on Education

 


 

MS IN ACTUARIAL SCIENCE

 

 

EXECUTIVE SUMMARY

 

 

The proposed MS in Actuarial Sciences is a rigorous, 40 pt. program of study designed to qualify graduates for entry level positions in the profession.[1]  Graduate and undergraduate programs in Actuarial Science are offered throughout the US.  And yet, no highly selective graduate program exists in the greater metropolitan area, where roughly a quarter of all actuarial positions nationwide are located; New York City and Hartford, Connecticut are indisputably the centers of the insurance industry in the US. 

 

Actuarial science is the study of managing economic risk. The field is dynamic, responding to advances in the mathematical theory of risk management as well as to changing economic circumstances.  Nevertheless, there is a core of foundational knowledge that must be mastered by the entry-level actuary.[2]

 

That knowledge ranges three disciplines:  Probability and Statistics; Business and Economics; and Actuarial Science.  The program exposes students to the mathematical theory of probability and statistics as well as basic statistical analytic methods; basic economic theory and methods of finance; and specific models and analytic tools particular to risk management.  Courses in probability (W4105) and inference (W4107) provide students with a fundamental background in the modeling and analysis of random phenomena.  Courses in the theory of interest (W4840), microeconomics (W3211) and macroeconomics (W3213), and corporate finance (W3003) provide the fundamental background in finance and business required of all actuaries. Courses in statistical methods—linear regression modeling (W4315), time series analysis (W4437) and survival analysis (W4543)—provide the foundation required to master a knowledge of actuarial models (K4820) and methods (K4825).

 

The MS program serves two audiences:  individuals who have completed their undergraduate degree with substantial coursework in mathematics, statistics, or economics, but who lack the comprehensive background in these fields or in actuarial science required to enter the actuarial profession; and, individuals who are already working as entry-level actuaries and who wish to prepare for the examinations within the context of a structured academic program. 

 

All students are expected to enter the program with knowledge of elementary economics, linear algebra, and multivariate calculus.  Students lacking these prerequisites will be advised to complete the appropriate coursework and reapply to the degree program. 

 

Those students who come with the foundational courses in hand will substitute electives in advanced statistics, financial economics, and risk management. 

 

Students may be exempted from SIEO W4105, SIEO W4107, ECON W3211, and W3213 if equivalent courses have been taken prior to enrollment in the program.  Students may be exempted from STAT W4315, STAT 4437, and BUSI W3003 if equivalent courses have been taken prior to enrollment in the program and the equivalent courses satisfy the Society of Actuaries requirements for Validation by Educational Experience (VEE).[3]  Under no circumstances will students be exempted from STAT W4840, ACTU K4820 and ACTU K4825.  The academic advisor grants exemptions based on a transcript review and results on placement examinations, administered when necessary. 

 

After being exempted from two courses, students must replace additional courses from which they are exempted with approved electives chosen from a list that includes STAT W4201, Advanced Data Analysis; SIEO W4606 Elementary Stochastic Processes; SIEO W4801, Introduction to Property and Liability Insurance Models; SIEO W4802, Introduction to Life Insurance and Aggregate Loss Models; SIEO W6501 Stochastic Processes and Applications; IEOR E4404 Simulation; MATH W4071 Introduction to the Mathematics of Finance; and BUSINESS B6301Corporate Finance. 

 

The student with a strong background in mathematics, statistics, economics, and business will be required to take only the core courses in actuarial methods and find greatest value in the opportunity to take electives in the areas outlined above.  However, it is the rare college graduate, essentially only the one who set out early on to become an actuary, who will have covered the whole spectrum of material required to qualify for an entry-level position in actuarial science.

 

In addition to coursework, students are required to enroll for at least one semester on a non-credit basis and at no additional cost in either an internship or the practitioner seminar series.  Students not working in the field are strongly encouraged to participate in the internship program, in which students are placed by Columbia with a firm in the greater Metropolitan area.  Test preparation courses are also offered to ready students to take SOA exams P, FM, M, and C (CAS exams 1-4).


PROGRAM OF STUDY

The proposed MS in Actuarial Science is 40 pts., with courses drawn almost entirely from the existing graduate offering of the Departments of Statistics, Economics, and Business.   Students may enroll in the program either full time or part time. 

 

FULL TIME

TERM I

STAT W4109 Probability and Statistical Inference 6 pts (NB:  combination of SIEO W4105 and STAT W4107)

ECON W3211 Intermediate Microeconomics, 3 pts

STAT W4840 Theory of Interest, 4 pts

 

TERM II

STAT W4315 Linear Regression Models, 3 pts

ECON W3213 Intermediate Macroeconomics 3 pts

ACTU K4820 Actuarial Models 6 pts

 

TERM III

STAT W4437 Time Series Analysis, 3 pts

STAT W4543 Survival Analysis, 3 pts

BUSI W3003 Corporate Finance, 3 pts

ACTU K4825 Actuarial Methods 6 pts

 

PART TIME

TERM I

STAT-IEOR W4105 Probability 3 pts

STAT W4840 Theory of Interest, 4 pts

 

TERM II

STAT W 4107 Statistical Inference, 3 pts

ECON W3211 Intermediate Microeconomics, 3 pts

 

TERM III

STAT W4315 Linear Regression Models, 3 pts

ECON W3213 Intermediate Macroeconomics 3 pts

 

TERM IV

STAT W4437 Time Series Analysis, 3 pts

BUSI W3003 Corporate Finance, 3 pts

ACTU K4820 Actuarial Models 6 pts

 

TERM V

ACTU K4825 Actuarial Methods 6 pts

STAT W4543 Survival Analysis, 3 pts

 

In addition to their prescribed coursework, all students may take electives in order to round out their understanding of business and/or prepare for more advanced examinations.  Moreover students not working in the field are strongly encouraged to complete an internship to acquire the work experience required of applicants for entry level professional positions.

 

 



[1] Long regarded as the last great apprenticeship, actuarial training has historically involved on-the-job mentoring, self-study, intensive professional seminars, and exam preparation.  However, today that training is gradually involving more and more formal, educational coursework, particularly at the early stages.  In fact, the SOA Board of Governors recently  formed the Accreditation and Implementation Task Force to establish the rules and procedures whereby academic actuarial science programs will potentially be accredited.  Columbia’s Professor Victor de la Pena, Department of Statistics, serves on the task force. 

 

[2] Actuaries are validated through examination and experience by the Society of Actuaries (SOA) or the Casualty Actuarial Society (CAS).  The SOA administers exams in life insurance, health benefits systems, retirement systems, and finance and investment.  The CAS administers exams in the property and casualty fields (fire, accident, medical malpractice, worker’s compensation, and personal injury liability).  The SOA and CAS administer jointly the first four examinations, which test knowledge of calculus, probability, statistics, and other areas within mathematics.  The proposed MS program will provide students with the foundational knowledge validated in SOA exams P, FM, M, and C (CAS exams 1-4).

 

[3] SOA assumes that all students standing for the actuarial examinations have base knowledge and they validate that knowledge either through examination or through VEE, Validation by Educational Experience.  The three topics that may be validated through VEE are Applied Statistical Methods, Corporate Finance, and Economics.  “Topics appropriate for VEE are those that are either best learned in a classroom environment or are somewhat peripheral to actuarial work.  Applied statistics requires analysis of data that is very difficult to validate with a traditional multiple choice exam.  While corporate finance and economics are not core topics, they are important enough to have some verification of learning take place.” SOA.org.