Upper-level actuarial exams are in essay format, requiring both conceptual discussions and extensive calculations to answer 30-50 questions within a 4-hour timeframe. Even for highly knowledgeable candidates, the sheer time constraints of the exam render it difficult to respond both thoroughly and within the allotted time. Thus, conciseness, without compromising the communication of understanding, becomes a priority.
The following ideas for condensing actuarial exam responses were derived from reviewing past sample answers released by the Casualty Actuarial Society. By understanding which answers received full credit while employing certain shortcuts of presentation, I was able to arrive at ideas that, when used in combination, may save candidates tens of minutes on the exam. This time can be devoted to reviewing one’s answers or to answering more questions than would otherwise be possible. While, as an outsider to the grading process, I can offer no guarantees, I plan to personally use these approaches to the extent they are relevant.
If other actuarial candidates have additional ideas to facilitate concise, effective exam answers, I welcome their input.
1. Common Abbreviations
Many insurance concepts have generally known abbreviations that do not need to be defined unless an explicit definition is requested. On most questions, it would be safe, for instance, to assume that the grader will know what ALAE, ULAE, IBNR, IBNER, PDLD, GAAP, SAP, and terms of similarly common usage stand for.
There are also commonly used general abbreviations, such as “&” for “and”, “b/c” for “because”, “w.r.t” for “with respect to”.
2. Uncommon Abbreviations
It is also possible to define uncommon (even self-invented) abbreviations once, and use them thereafter. For instance, one could refer to “the Bornhuetter-Ferguson method (B-F)” and then subsequently state that “B-F assumes…” or “according to B-F…”.
As long as the grader understands what the abbreviations mean in the context of one’s answer, full credit should be possible.
Here is a non-exhaustive list of abbreviations that may be useful for the 2010 CAS Exam 6 in particular:
B-F: Bornhuetter-Ferguson method
B-S: Berquist-Sherman method
CL: Chain ladder
C-N: Conger-Nolibos generalized approach
Dev.: Developed or Development (depending on context)
G-B: Gunnar Benktander method
GL: General liability
M-A: Mango-Allen adjustment
QS: Quota share
S-B: Stanard-Bühlmann method (“CC” for “Cape Cod method” can also be used).
SS: Surplus share (definitely define that one before using!)
WC: Workers’ compensation
3. Shortcuts for Repetitive Calculations
It is possible to save time in cases where one must perform multiple calculations using the same basic formula or approach. Instead of displaying every single calculation, one could simply display (1) the formula used, (2) a sample calculation, and (3) the final results of all the other calculations.
As a non-insurance illustration, suppose you were faced with the following problem:
Find the hypotenuses of the right triangles with the following legs:
The long way to answer would be to display all four calculations. A shorter way would be the following:
Formula: c = √(b2 + a2)
Sample: √(32 + 42) = 5
Answers: 5, 17, 41, 29
The only possible drawback to this approach is that, if one makes a mistake in a calculation other than the sample calculation, the specific nature of the mistake will not be visible to the grader. It is possible that the grader will simply assume a mechanical error and therefore be lenient in giving partial credit, because the formula and sample calculation demonstrate an understanding of the ideas involved. However, it is impossible to offer any guarantees here.
4. Alternatives to Complete Sentences
While, in academic settings, answering in complete sentences is a requirement for most exams and assignments, the sheer time pressure of an actuarial essay exam renders this approach sub-optimal. A review of past exam answers that have received full credit suggests that graders do not remove points from responses that convey a candidate’s knowledge of the tested content but are written in sentence fragments.
Instead of writing in complete sentences, there are many possible alternative ways of answering, depending on the question. For instance, a question asking the candidate to compare and contrast certain aspects of Method X and Method Y might be answered as follows:
Method X: (List features of method)
Method Y: (List features of method, preferably using language parallel to what was used for Method X.)
Using a bulleted or numbered list to answer some questions may not only save time but may make it easier for the grader to identify the substance of the answer.
Chains of causation or implication may be expressed via an “→” symbol (e.g., “Writing new business → acquisition expense recognized immediately, premiums earned over time → decline in policyholders’ surplus → need for surplus relief.”
It is also acceptable to omit certain articles and to omit stating the premise of the question in the answer’s first sentence, as long as the meaning is clear. Furthermore, some instances of expressions like “that”, “then”, and “in order” may be omitted without compromising the answer’s intent.
As an illustration, I present two ways of answering my Problem S6-9-3(b): “What effect should be removed in order to evaluate development patterns correctly (Statement of Principles, p. 16)?”
Complete-sentence answer (my original): “The effect of discounting should be removed in order to evaluate development patterns correctly. If a reserve is established as a present value of future costs, then upward development may occur simply as a result of paying claims, and this may send a misleading signal.”
Condensed answer: “Effect of discounting should be removed. If reserve is set as present value of future costs, upward development may occur simply as result of paying claims → misleading signal may result.”
Again, I welcome input on these ideas and other ideas for facilitating conciseness on actuarial essay exams.