GB Module 2

GB Module 2 – Professional considerations in the group benefits environment is one of the two modules of the group benefits track of the Canadian Institute of Actuaries' Fellowship (FCIA) pathway.

About the module

The primary audience for the FCIA modules is individuals who desire to be admitted as Fellows of the CIA.

Individuals seeking continuing professional development credit can also register for the FCIA modules.

Each FCIA candidate through Pathways 1 and 2 is required to complete both FCIA modules, while Pathway 3 candidates will have to complete the second module. It is anticipated that FCIA module candidates will have six months from the date of module purchase to complete each FCIA module. As a general guideline, candidates should allocate approximately 100 hours to complete all activities included in a module.

Learning Objectives

Professional considerations

1. Outline the qualification requirements of the appointed actuary in Canada.
2. Describe the role and responsibilities of the appointed/valuation actuary in Canada.
3. Outline for which instances an appointed actuary is required in Canada.
4. Describe the roles and responsibilities of actuaries in life insurance companies, such as in the areas of valuation, pricing, policy illustration, and ERM.
5. Outline qualification requirements under the U.S. qualification standard (USQS).
6. Outline requirements of the CIA professional standards that may inadvertently be breached in the life insurance practice.
7. Identify and apply actuarial standards of practice relevant to:
   • a. Financial reporting and valuation.
   • b. Financial condition testing.
   • c. Non-guaranteed elements.

Benefit law and regulation

1. Understand and apply the effects of applicable legislation and regulation, including (but not limited to) privacy, human rights, and non-discrimination, on the following:
   • a. Human rights and non-discrimination.
   • b. Provisions of Canadian Life and Health Insurance Association (CLHIA) guidelines (definitions of groups, takeover rules, coordination of benefits, disclosure).
   • c. Provincial health plans.
   • d. Applicable provisions of the Civil Code of Québec to group insurance.
   • e. Applicable provisions of other relevant laws and regulations to group insurance.
   • f. Relevant case law and its implications.
   • g. Provincially mandated benefits (prescription drug coverage in Québec, etc.).
   • h. The main differences between Québec law and the rest of Canada (designation of beneficiary, change of insurers, civil union, etc.).
   • i. Legal and tax aspects of self-insurance.
2. Demonstrate understanding of regulators’ guidance and context for different approaches to responsible investment and specifically, the integration of environmental, social, and governance (ESG) factors in the investment process.
3. Demonstrate an understanding of the underlying issues that constitute factors within each of the ESG areas.
4. Demonstrate an understanding of the ESG market: relevance, size, scope, key drivers and challenges, and risks and opportunities.
5. Describe examples of public health programs and initiatives and data issues in the United States and Canada.

Regulation and taxation of insurance

1. Explain why solvency regulation is important.
2. Describe implications of insolvency.
3. Describe the required financial reporting requirements.
4. Explain the regulatory processes used to monitor solvency.
5. Explain how contracts are taxed to the owner of the contract.
6. Describe constraints on policy design imposed by tax laws.
7. Describe the two major categories of differences between pre-tax earnings and taxable earnings.
8. Distinguish between the different forms of taxes paid by Canadian companies.
9. Understand the differences between federal and provincial taxation.

Canadian financial reporting

1. Apply the principles underlying the determination of LICAT, including the following:
   • a. Identification of significant risk components;
   • b. Identification of specialized-product LICAT requirements;
   • c. Interpreting results from a regulatory perspective; and
   • d. Compare and contrast to other regulatory capital regimes.
2. Describe and explain the regulatory and tax environment for insurance and annuities in Canada, specifically: effect on product development, reserving, pricing, and business practices.
3. Describe key IFRS 17 financial concepts for written and ceded coverages and how they are calculated.
4. Describe IFRS 17 valuation methods.
5. Calculate IFRS 17 liabilities for life and annuity products and their associated riders.

Risk management and mitigation

1. Outline the roles of rating agencies, analysts, and regulators together with their methods and impact on insurance companies.
2. Calculate and evaluate financial conditions testing (FCT).
3. Calculate and evaluate stress testing (own-risk and solvency assessment, or ORSA).
4. Integrate climate-related considerations in the ORSA, stress testing, and add climate scenario analysis where applicable.
5. Apply the applicable actuarial standards of practice.
6. Outline problems or recent problems faced by insurance companies.
7. Identify general sources of risk in a group insurance line of business (strategic, operational, control, etc.).
8. Identify sources of risk in products, including (but not limited to) mortality, morbidity, and lapse.
9. Identify sources of risk in investments, including (but not limited to) credit risk, liquidity, and asset/liability matching.
10. Identify other risks, including operational, marketplace, competition and expense risks, legislative risk, and risk from government plan cost shifting.
11. Outline the relation between risks (e.g., product, investments, and operational) and opportunities and influences on firm strategy.
12. Understand the roles of rating agencies, analysts, and regulators together with their methods and impact on insurance companies.

Risk management and reinsurance

1. Outline and describe the following concepts of reinsurance:
   • a. Risk appetite.
   • b. Risk identification.
   • c. Risk assessment.
   • d. Risk monitoring.
   • e. Risk limits.
   • f. Risk mitigation.
   • g. Risk capacity.
   • h. Risk tolerances.
   • i. Desired risk profile.
   • j. Risk objectives.
   • k. Risk reporting.
   • l. Reinsurance types and uses.
   • m. Management and mitigation of catastrophic claims.
   • n. Non-evidence maximums (NEMs).
   • o. Underwriting guidelines (including unique aspects of group insurance underwriting such as underwriting on the employer and on the broker).
   • p. Large amount pooling.
   • q. Assuris and Canadian Drug Insurance Pooling Corporation (CDIPC).
2. Explain the purpose and use of reinsurance in the context of group insurance.

Communication and organizational behaviour

1. Explain differences between good and poor communication techniques and their implications.
2. Apply techniques to structure ideas logically.
3. Develop clear fact-based messages that can be communicated persuasively.
4. Explain the role of cognitive biases on making suboptimal individual decisions.
5. Evaluate the role of organizational behavior on organizational decision-making processes and efficacy.
6. Explain why communication is strategically important to organizations.
7. Describe how information is communicated within organizations.
8. Describe organizational and individual barriers to effective communication.
9. Identify the risks of ineffective communication.
10. Explain how to overcome communication barriers and minimize risks of ineffective communication.
11. Recognize the influence of culture and diversity on communication.
12. Apply CIA Standards of Practice and Rules of Professional Conduct in business communication.

Source Material

Source Material

• FCIA Syllabus – Group benefits track (CIA - 2024)
  • GB Module 2 (pp. 19–21)