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The Actuary as Expert Witness

by Charles L. McClenahan

At some point in their careers, many actuaries will be presented with the opportunity/obligation to present testimony as an expert witness. This testimony might be in court, in a deposition or as part of a regulatory hearing. Actuarial Standard of Practice No. 17 Expert Testimony by Actuaries provides essential guidance which, if followed, will help to assure that the testifying actuary will maintain his or her professionalism. What follows is some additional advice that may help the actuary to maintain the illusion that he or she actually possesses some expertise.

The advice I offer is basically this:

Know your limits;

Control your counsel;

Don't pontificate, educate;

Know the details (but keep them in reserve); and

Don't get cute!

The first piece of advice—know your limits—refers to the area of your expertise. While it is unlikely that you will wander beyond those subjects in which you have been trained and with which you feel comfortable, under cross-examination you may be asked to extend your opinions in an attempt to make you look silly. For example: "Well, Actuary, you have testified that it is your opinion that the probability that the reserves are within 5 percent of adequacy is greater than 90 percent. Is it greater than 91 percent?" Give either a "yes" or a "no" to this question and you're trapped. Unless you have performed alternative calculations, the proper answer is that you haven't evaluated the reserves at that level of significance.

Controlling your counsel is possibly the greatest challenge in expert testimony. If you have helped to prepare the questions to be put to you on direct examination, make certain your attorney knows to ask them precisely the way they were written. Many lawyers don't like to read questions from a list, and in attempting to appear informal, turn elegantly crafted questions into garbled technospeak. When you get an unintelligible question, don't attempt to "fix" it with a good answer. Simply asked that the question be rephrased.

Pontification is the actuarial expert's worst enemy. In most cases, the only other mathematician in the room is the other side's expert. Everyone else, judge, jury, counsel, and other witnesses will likely be either intimidated by mathematics or suspicious of statistics. If you present yourself as an actuarial oracle who is there to hand down the numerical wisdom of the ages, you will impress no one but yourself. If, however, you can assist the judge and jury (or the hearing officer or commissioner) in a non-technical way to understand the basis for your opinion, you will be perceived as being helpful as well as wise.

The Greek philosopher Heraclitus said, "Men who wish to know about the world must learn about it in its particular details." Before giving expert testimony make certain that you know the source of every number and the rationale for every assumption that went into your opinion. If possible, you should have the same level of knowledge regarding the opinion of any other actuarial expert who presents testimony. But don't use the details unless they are needed—usually on cross-examination.

The final piece of advice is don't get cute. By this I mean don't use your skills and education to take advantage of those without your experience and training. Try to answer each question honestly and in a way which enhances the understanding of all parties. If you believe in your opinion you do not need to resort to gamesmanship or trickery to support your case. And if you don't believe in your opinion, you shouldn't be there in the first place. Expert testimony is not for everyone. I have seen a qualified and articulate actuary crumble under mild cross-examination. I have watched a normally concise actuary wax verbose until his own attorney's eyes glazed over. But to those who enjoy it, nothing measures up to the opportunity to defend a well-grounded actuarial opinion against the onslaughts of an alternative presented by another professional.