From the Readers

Issues on Rate Levels

Dear Editor:

There is an assumption contained in the fact pattern presented in [Ethical Issues Forum, The Actuarial Review, August 2000,] which I would like to question—the assumption is that Joe Actuary's time on the project can be imputed from his bill and his hourly rate. This assumption does a grave disservice to the honorable consulting actuaries who have built the several distinguished consulting practices operating today.

The casualty actuaries with whom I have served in the consulting ranks have often found it necessary to work long hours "over budget" without hope of being able to collect their nominal hourly rate, mostly due to their determination that they were going to deliver a good quality work product, and at the expense, if necessary, of their "spare time" (or family time). The actuaries who have made such sacrifices for the sake of "doing a good job" have often, but not always, succeeded in recouping their financial sacrifices in the form of more adequate budgets, or more satisfactory work plans, in later years' engagements.

To indict Joe Actuary on the basis of looking at his time billed, without examining his work papers for evidence of the kind and amount of work performed is unfair to him, and arguably unfair to other consulting actuaries who have found a way to deliver good work in the face of unrealistic budgets.

James A. Hall III, FCAS

Note: "Ethical Issues Forum" author, Chad Wischmeyer, thanks Mr. Hall for his response and has no disagreement with his contention. In his scenario, Joe Actuary would have a professional obligation to invest whatever time was necessary to provide a professionally acceptable work product regardless of the agreed upon fee.