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Which reinsurance arrangement is proportional, meaning the reinsurer automatically takes a fixed percentage of every policy covered by the treaty?

Per risk excess-of-loss treaty

Quota share treaty

Aggregate stop-loss treaty

Catastrophe excess-of-loss treaty

to track

2026 Statistics

Key Facts: SOA FAM Exam

Official Questions

SOA 2026 syllabus

3.5 hrs

Time Limit

SOA

6-10

Passing Grades

SOA 0-10 scale

$408

Standard Fee

SOA fee table

Content Domains

SOA syllabus

200

Practice Questions Here

OpenExamPrep

SOA FAM is a 34-question preliminary actuarial exam administered in 3.5 hours. The blueprint spans 10 weighted content domains, with the heaviest emphasis on long-term insurance present values and premium/policy value calculations. SOA reports grades on a 0-10 scale, and a grade of 6 or higher is passing.

Sample SOA FAM Practice Questions

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1Which reinsurance arrangement is proportional, meaning the reinsurer automatically takes a fixed percentage of every policy covered by the treaty?

A.Per risk excess-of-loss treaty

B.Quota share treaty

C.Aggregate stop-loss treaty

D.Catastrophe excess-of-loss treaty

Explanation: A quota share treaty is proportional reinsurance because the ceding insurer and reinsurer split premiums and losses by a fixed percentage on every covered policy. Excess-of-loss and stop-loss arrangements are nonproportional because they only respond once losses exceed an attachment point.

2An insurer retains 40% of each policy under a quota share treaty. A covered loss is 150,000. How much of the loss does the insurer retain?

A.60,000

B.90,000

C.100,000

D.150,000

Explanation: Under quota share reinsurance, the insurer retains its stated percentage of every covered loss. Retained loss = 0.40 × 150,000 = 60,000, with the remaining 90,000 ceded to the reinsurer.

3A per risk excess-of-loss treaty is written as 200,000 xs 100,000. If a single covered claim is 260,000, how much does the reinsurer pay?

A.100,000

B.160,000

C.200,000

D.260,000

Explanation: The insurer keeps the first 100,000 because that is the retention. The reinsurer then pays the layer above it, capped at 200,000, so it pays 260,000 - 100,000 = 160,000.

4Under a surplus share treaty, the ceding insurer keeps a fixed retention line and cedes only the amount above that line. Which statement best distinguishes surplus share from quota share?

A.Surplus share is nonproportional while quota share is proportional

B.Surplus share cedes the same percentage on every policy regardless of size

C.Surplus share can produce different ceded percentages for different policy amounts

D.Quota share applies only to catastrophe losses

Explanation: Both quota share and surplus share are proportional forms of reinsurance, but surplus share depends on the policy amount relative to the insurer retention. Because larger policies cede more amounts above the retention, the ceded percentage can vary by policy.

5An insurer has a surplus share treaty with a retention of 300,000 and 3 lines of surplus. What is the maximum policy amount that can be fully covered by the insurer plus treaty?

A.600,000

B.900,000

C.1,200,000

D.1,500,000

Explanation: Three lines of surplus means the treaty can accept 3 × 300,000 = 900,000 above the insurer retention. Adding the insurer retention gives a maximum full capacity of 1,200,000.

6Which item is usually classified as an allocated loss adjustment expense (ALAE)?

A.Salaries of general claims department staff

B.Rent for the home office

C.Attorney fees tied to a specific liability claim

D.Advertising expenses for policy renewal campaigns

Explanation: Allocated loss adjustment expenses are expenses that can be assigned to a specific claim, such as defense counsel or outside adjuster fees. General salaries and office overhead are usually unallocated expenses because they support the claims function broadly rather than one claim.

7A policy has a 500 ordinary deductible and a 10,000 limit. A covered loss is 12,300. How much is paid by the insurer?

A.9,500

B.10,000

C.10,500

D.11,800

Explanation: The deductible reduces the covered loss to 12,300 - 500 = 11,800. The policy limit then caps the insurer payment at 10,000.

8A franchise deductible differs from an ordinary deductible because under a franchise deductible:

A.the insurer always subtracts the deductible from the loss payment

B.losses below the deductible are paid in full

C.losses above the deductible are paid in full with no deductible subtraction

D.the deductible applies only to catastrophe claims

Explanation: With a franchise deductible, losses below the deductible are not covered, but once the loss exceeds the threshold the insurer pays the full covered loss. An ordinary deductible always subtracts the deductible amount from the payment.

9Which statement best describes facultative reinsurance?

A.It automatically covers every policy in a defined class

B.It is negotiated separately for an individual risk or policy

C.It reimburses only aggregate annual loss ratios

D.It is available only for life insurance products

Explanation: Facultative reinsurance is underwritten and negotiated case by case, typically for large or unusual risks. Treaty reinsurance covers a defined portfolio automatically once the treaty terms are in force.

10An aggregate stop-loss treaty has retention equal to 120% of expected annual losses. Expected losses are 4.0 million and actual losses are 5.3 million. Assuming no treaty limit, what does the reinsurer pay?

A.0

B.300,000

C.500,000

D.1,300,000

Explanation: The attachment point is 1.20 × 4.0 million = 4.8 million. The treaty reimburses the amount above that point, so the reinsurer pays 5.3 million - 4.8 million = 0.5 million, or 500,000.

About the SOA FAM Exam

The SOA Fundamentals of Actuarial Mathematics (FAM) exam is a core ASA-pathway preliminary exam covering short-term insurance modeling, option pricing, mortality, actuarial present values, premiums, and policy values.

Assessment

34 multiple-choice questions

Time Limit

3 hours 30 minutes

Passing Score

Grade of 6 or higher on SOA's 0-10 scale

Exam Fee

$408 (Society of Actuaries (SOA))

SOA FAM Exam Content Outline

5-10%

Short-Term Insurance and Reinsurance Coverages

Policy structures, reinsurance forms, and short-term coverage mechanics.

12.5-17.5%

Severity, Frequency, and Aggregate Models

Frequency and severity distributions, aggregate loss models, and deductible or limit effects.

2.5-7.5%

Parametric Estimation

Maximum likelihood, method of moments, and estimation for actuarial loss models.

2.5-5%

Introduction to Credibility

Full-credibility standards and credibility-weighted estimators.

10-15%

Pricing and Reserving for Short-Term Insurance Coverages

Ratemaking, claim cost development, and core loss-reserving techniques.

2.5-7.5%

Option Pricing Fundamentals

No-arbitrage logic, option payoffs, and binomial pricing.

2.5-5%

Long-Term Insurance Coverages and Retirement Financial Security Programs

Life insurance, annuities, and retirement-income program concepts.

10-15%

Mortality Models

Survival functions, life tables, forces of mortality, and actuarial notation.

12.5-20%

Present Value Random Variables for Long-Term Insurance Coverages

Actuarial present values for life insurance, annuities, and benefit variations.

15-22.5%

Premium and Policy Value Calculation for Long-Term Insurance Coverages

Net and gross premiums, expense loadings, reserves, and policy value recursion.

How to Pass the SOA FAM Exam

What You Need to Know

Passing score: Grade of 6 or higher on SOA's 0-10 scale
Assessment: 34 multiple-choice questions
Time limit: 3 hours 30 minutes
Exam fee: $408

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

SOA FAM Study Tips from Top Performers

1Spend disproportionate time on long-term insurance present values and premium or policy value calculations because those sections carry the most weight.

2Build a formula sheet that links survival probabilities, actuarial present values, premiums, and reserve recursions instead of memorizing each formula in isolation.

3Practice both discrete and continuous-style setups so you can move quickly between q_x / p_x notation, life tables, and force-of-mortality relationships.

4For short-term topics, drill distribution recognition, deductible and limit transformations, and core ratemaking or reserving workflows until the setup becomes automatic.

5Use timed mixed sets near the end of prep because FAM tests whether you can switch cleanly between short-term insurance and life-contingency mathematics under time pressure.

Frequently Asked Questions

How many questions are on SOA Exam FAM?

SOA FAM has 34 multiple-choice questions. The SOA reduced the exam from 40 questions to 34 beginning with the November 2024 administration, and that remains the current structure in 2026.

How long is the SOA FAM exam?

You get 3 hours and 30 minutes to complete FAM. That timing did not change when the question count was reduced.

What is the passing score for SOA FAM?

SOA reports grades on a 0-10 scale, and grades from 6 to 10 are passing. The SOA does not publish a fixed raw percentage because the pass mark is set for each sitting.

What topics matter most on FAM?

The heaviest-weighted area is Premium and Policy Value Calculation for Long-Term Insurance Coverages (15-22.5%), followed by Present Value Random Variables for Long-Term Insurance Coverages (12.5-20%) and Severity, Frequency, and Aggregate Models (12.5-17.5%). Mortality Models and short-term Pricing and Reserving are also major sections.

What changed for FAM in 2026?

The main 2026 operational update is that starting with the February 2026 administration, unofficial pass/fail results are emailed within one hour of the exam appointment. The most recent blueprint change before 2026 was the July 18, 2024 reduction from 40 to 34 questions with corresponding syllabus trimming.

How much does SOA FAM cost?

The standard SOA FAM exam fee is $408 in 2026. SOA also lists a discounted $320 student fee for eligible full-time students.