Re: Statement of Opinion Question by "BRAD GILE" <bgile@amfam.com>

BRAD GILE ( (no email) )
Wed, 8 Apr 1998 09:44:27 -0500

When I sent my response, I was well aware that the P/C opinion covers only
the liability side, and I agree that the actuary is not required to opine
on the financial health of the insurer. When, however, something as
overwhelming as negative surplus shows up, I cannot see how the actuary can
ethically ignore it. Consider the following analogy in medicine. The
surgeon comes out to the waiting room and tells the patient's family, "The
operation was a success and all cancer was removed.
By the way, the patient does have abnormal vital signs." The doctor leaves,
failing to mention that the patient died on the operating table due to
heart failure.

Brad Gile, FSA
----------
> From: Todd R. Bault <bault001@maroon.tc.umn.edu>
> To: 'casnet@lists.casact.org'
> Subject: FW: Statement of Opinion Question by "BRAD GILE"
<bgile@amfam.com>
> Date: Wednesday, April 08, 1998 9:07 AM
>
> While I agree that Blanchard's and Miller's replies reflect the "letter
of
> the law" and probably would be acceptable for an actuarial opinion, Gile
> points outs the counterintuitive nature of the result. Such an opinion
> would probably provoke a layperson to ask what good is an actuarial
opinion
> if it allows companies to be insolvent. I'm sure we could convince other

> actuaries that Blanchard and Miller are correct, but I don't think that
my
> mother would buy it.
>
> This is a good example of how actuaries probably need to be more
pro-active
> in keeping their profession relevant. While I certainly don't expect
> individual actuaries to go out on a limb and put themselves in jeopardy,
> this example indicates to me that we, as a profession, should be moving
> quickly towards opining on the entire balance sheet. If we are not
willing
> to do this, we could eventually be cut out of the process in favor of
those
> who are willing to take on this job.
>
> Todd Bault, FCAS
>
> The opinions expressed above are mine alone, and do not necessarily
reflect
> the views of other parties.
>
>
> Visit the CAS Web Site at http://www.casact.org
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