UWM-L&S: Faculty Document No. 603

College of Letters and Science Faculty Document No. 603
November 1, 2001

2000-2001
Recommendation of the Course and Curriculum Committee and the Faculty of the Department of Mathematical Sciences to Approve a Request for an Entitlement to Plan a Major in Acturial Science

Recommendation:

That the L&S Faculty endorse the request from the Department of Mathematical Sciences for an Entitlement to Plan a Major in Actuarial Science.

Rationale:

This program will extend and improve UWM's position as one of only two institutions in Wisconsin providing comprehensive training for future actuaries at the undergraduate level, and as one of the fewer than 60 undergraduate programs nationwide to be classified as an Advanced Undergraduate program (the highest rating) by the Society of Actuaries. (See http://www.soa.org/academic/schoollist.html for details and criteria.) There is significant interest in such a program as evidenced by past and current enrollment, and it is one of the few opportunities in Letters and Sciences for students to complete their undergraduate studies and move directly into a job making direct use of the skills acquired in school. We have a long successful track record of training and placing students in actuarial positions, and creating this major is the next logical step in maintaining this tradition. (See also Section III below.)

PROGRAM IDENTIFICATION

1.1	Title of Proposed Program: Major in Actuarial Science (Bachelor of Arts)
1.2	Department or Functional Equivalent: Department of Mathematical Sciences
1.3	College, School, or Functional Equivalent: College of Letters and Sciences
1.4	Timetable for Initiation: Fall, 2002-2003. The Actuarial Science option of the major in Mathematical Sciences is discontinued upon implementation of this program.

PROGRAM DESCRIPTION

2.1

Objectives:

The primary objective of the proposed major is to prepare students for careers as actuaries. To accomplish this goal, the program does two things:

It gives students the necessary foundation in statistics, mathematics, and economics so that they will be prepared for advancement in the field.

It prepares them to pass the first two actuarial examinations. (A description of the Course 1 and Course 2 examinations may be found at http://www.soa.org/eande/examinations.html

2.2

Curriculum

Students must meet all requirements for earning a Bachelor of Arts degree from the College of Letters and Sciences. No new courses are proposed. Required courses (preparatory and specialized) are indicated below, followed by a list of recommended courses. In addition, a proposed schedule is attached, showing how a student can complete these requirements in eight semesters, not including Summer or UWinteriM terms.

Students who intend to complete the program in four years should have a mathematics placement level of B or better (the entry level for Math 116 or Math 225) or plan to take summer course work in mathematics, as there are many dependencies among the required courses, and the program is very structured. Upon admission to the University, a student must consult with a Department of Mathematical Sciences advisor to plan a course of study that will allow the student to graduate in a timely manner.

Required Preparatory Curriculum

Required Specialization

- allows students to examine issues such as insurance red-lining

- allows students to strengthen their logical skills in a mathematics setting

Model Curriculum

2.3	Interrelationship with Other Curricula: Students who complete this major automatically will complete the requirements for a minor in mathematics and typically will be 12 credit hours short of a major. Similarly, they will be 3 credit hours short of a minor in economics and 15 credit hours short of a major. A direct benefit to the Economics Department is anticipated in an increased number of Economics minors, as evidenced by the number of students in the current sub-major who have chosen to minor in economics.
2.4	Method of Assessment or Evaluation: Assessment of the program may be based on: its record of placing students into actuarial and related positions, students' grades, and students' performance on the Course I and Course II Actuarial Examinations. A disparity between performance on these examinations and grades in corresponding courses may indicate problems in the program. Conversely, agreement in these measures would indicate the program is of high quality.
2.5	Accreditation Requirement: There is no formal accreditation of actuarial programs at this time. However, the Casualty Actuary Society (CAS) and the Society of Actuaries (SOA) maintain a self-reported database on programs at http://www.soa.org/academic/actcol.html where one can view various measures of program effectiveness.
2.6	Career Advising: The Department has one faculty member with professional actuarial experience and an Actuarial Club that periodically invites recruiters to speak to UWM students. The Department offers review for the SOA examinations as independent study courses.
2.7	Outreach: At this time, no formal outreach activity is planned. There already are non-degree students attending some of these courses in this program. This additional source of students may be expected to expand as the program becomes better known as a full-fledged major.
2.8	Integration of Technology: Computing courses are required for this program. Statistics and probability courses in Mathematical Sciences currently incorporate computer technology for problem solving, and faculty use the web to make course materials available.

RATIONALE

3.1	Nature of the current actuarial option: The Department has long offered courses designed to prepare students for several SOA examinations and has been a test center for many years. However, the examination system changed in 2000. In addition to the standard mathematical subjects, students now need preparation in finance and economics to pass the early examinations, which are highly interdisciplinary. In preparation for these changes, the Department began offering a redesigned Option in Actuarial Science in Fall 1999, replacing 9 credits of junior/senior level course work in mathematics and statistics with three credits of economics, 3 credits of finance, and 3 credits from either mathematics, finance, or economics. This in turn, requires preparatory course work outside of mathematics and statistics. While still within the Department's educational mission, the resulting program falls outside the bounds of a normal mathematics major. The redesigned option was established with the understanding that a separate major would be pursued.
3.2	Demand: The present Option in Actuarial Science has been in existence for three semesters, and currently (Spring 2001) enrolls 14 students. In the first year of the program's official existence, three students graduated. The Department currently has enrollments of about 50 mathematics majors. Over the past 3 years roughly 37% of all students earning bachelor's degrees in mathematics have concentrated in actuarial science. In fact, actuarial science has been the most popular option within UWM's Mathematics Major for many years. (Other options are Pure Mathematics, Applied Mathematics, Computational Mathematics, and Statistics.) At the Fall 2000 UWM Open House, there were a dozen inquiries about the program. To put this in perspective, this exceeded the number of all other inquiries concerning either Mathematics or Atmospheric Science (housed within the Department). The job market for actuaries has been strong, and the outlook for graduates continues to be good. In January 2001, a search of the SOA Job Link showed 55 openings posted in the previous 60 days. All but one of the Department's recent actuarial graduates are employed as actuaries, and it is common for students to work in the actuarial departments of local firms while still in school. In Fall 2000 alone, the Department had five inquiries by companies for graduates from our program, even though the program is virtually invisible. The number of inquiries the Department receives from recruiters suggests strongly that the industry's needs exceed the number of students graduated by the program at UW-Madison. This is further supported by the ease with which UWM's actuarial graduates find placement in industry. The Department predicts that in five years' time it can achieve enrollments on the order of 30 declared actuarial science majors, particularly as the program's visibility rises. The program should be able to graduate around 12 students per year, about half the number graduated from UW-Madison annually.
3.3	Greater visibility: Because it is not listed as a major, many students and employers do not know that an actuarial program exists at UWM. Advisors within the College are not always aware of the current Actuarial Option, nor are other program units. There is no question that this is the major impediment to enrollment in actuarial science at UWM. Thus, when Trustmark Insurance Company in Lake Forest, Illinois, wanted to interview candidates at UWM for actuarial positions, its representatives contacted the School of Business Administration. The School could not provide them with any undergraduate candidates and did not contact or refer Trustmark to the Mathematical Sciences Department.
3.4	Appeal to liberal arts students This program is housed within the College of Letters and Science, rather than the School of Business Administration (as is the case at UW-Madison and many other institutions). It does not have the requirements of a full mathematics major. The program thus is attractive to liberal arts students, who, in turn, will bring certain important strengths to the profession, particularly a broad background, including skills in written and oral expression.

RELATION TO INSTITUTIONAL MISSION, STRATEGIC PLAN, GOALS, AND OBJECTIVES

RELATION TO OTHER ACADEMIC PROGRAMS IN THE UW SYSTEM, THE REGION, AND THE NATION

5.1	At UW-Milwaukee: The proposed major will be the only program in actuarial science at UWM (as is the case with the option it will replace). Because of the structure of the business major, students in the School of Business Administration would find it very difficult to fit the necessary amount of mathematics, statistics, and economics course work into a four-year program that would prepare them for the first two SOA examinations. The proposed major goes beyond this level - for example, by including courses in computer science.
5.2	In the UW System: The proposed major and the Actuarial Science major at UW-Madison are the only programs in Wisconsin that satisfy the SOA designation "Undergraduate - Advanced (Curriculum covers all topics on first two CAS/SOA exams plus 12 semester hours of topics on third and fourth)" http://www.soa.org/academic/schoollist.html. There also are programs at UW-Whitewater, -Superior, and -Eau Claire that satisfy the SOA designation "Undergraduate - Introductory (Curriculum covers all topics on the first CAS/SOA exam, and includes introductory mathematics of finance and micro/macro economics courses)." These programs do not lead to a bachelor's degree, but they do prepare students for the first examination. The Actuarial Science major at UW-Madison is housed in the School of Business. Thus, students are admitted formally to the program as juniors. UW-Madison students also may specialize in actuarial science from within the College of Letters and Science by majoring in mathematics and choosing "Option 2," which emphasizes applications to other fields, but the great majority chooses the Business School path. Comparison with the proposed major at UWM, therefore, is complicated, but certain key points may be noted. The proposed UWM program has more required courses in mathematics, statistics, economics, and finance. Presumably, this is possible because of the greater latitude in course selection permitted by the Letters and Science degree requirements. What distinguishes UW-Madison actuarial science majors from other business majors is a list of 17 courses (55 cr) from which they must select 23 credits. The proposed major requires 36 credits from the equivalent list and substitutes Math 571 for Madison's ACT 650 (see below). Also, the list includes AS 300, Review Classes for Exams 1 and 2; such classes are offered at UWM, but they will not apply toward the proposed major. The mathematics and statistics courses in the proposed major are those taken by mathematics majors, while the corresponding courses required of actuarial science majors at UW-Madison generally are designed for students in business and the social sciences. (Exceptions are UW-Madison's Math 221 and 222.) UW-Madison's major requires ACT 650 and one of ACT 651 and 652. There are no corresponding courses at UWM. These courses address the part of SOA Exam 3 dealing with risk theory. Instead, the proposed major prepares for the probability modeling aspect of Exam 3 via Math 571. The proposed program requires 3 more credits of calculus than that at UW-Madison, and it requires 7 credits of computing courses instead of the 3 required of business students at Madison. UW-Madison students who choose to emphasize actuarial science through "Mathematics-Option 2" naturally will take more rigorous mathematics courses and may have greater flexibility in defining their programs than students in the School of Business. However, they must fulfill the usual credit requirements for the mathematics major. The proposed program requires fewer credits in mathematics and statistics while adding requirements outside of these subjects. The proposed program thus has less of a business emphasis than the major at UW-Madison, and it does not include any courses designated "Actuarial Science" (such courses do not currently exist at UWM). In its liberal arts approach, it bears some resemblance to the "Mathematics-Option 2" major. Finally, in requiring a course in probability modeling as well as greater mathematical proficiency, the proposed program actually appears to share some features with the UW-Madison's Master's in Actuarial Science. In sum, the proposed major should appeal to students with strong mathematics backgrounds and to students in the liberal arts who are interested in pursuing a career in actuarial science. Located in Milwaukee, it can benefit from its direct links with the actuarial industry in Southeast Wisconsin. These aspects distinguish it from the existing major at UW-Madison.
5.3	In the Midwest and nationally: Other programs comparable to the proposed UWM major are offered at: Ball State University Bradley University DePaul University Drake University University of Evansville University of Illinois at Urbana-Champaign Illinois State University University of Iowa University of Michigan Purdue University Southern Illinois University-Edwardsville All offer roughly the same curriculum as the proposed major. The average number of graduates annually is about 12 per institution, with a range of 2 (Bradley University) to 30 (University of Illinois). There are no comparable programs in Minnesota, so it is not possible for Wisconsin students to take advantage of reciprocity agreements with Minnesota institutions. By the same token, the proposed major should be attractive to Minnesota students. Nationwide, there are fewer than 60 programs that prepare students for the first two actuarial examinations. (See http://www.soa.org/academic/schoollist.html for a list.

PROJECTED SOURCE OF RESOURCES