Practical Professionalism

by Mindy Moss, FCAS, CAWG Vice-Chair

Wherever you are on your CAS journey, there are professional standards to which you are held. Candidates must abide by the Code of Professional Ethics for Candidates. CAS members are held to the standards of the CAS Code of Professional Conduct. Precept 3 in the CAS Code states:

An Actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice.

Thus, actuaries practicing in the U.S. must follow the ASOPs put forth by the Actuarial Standards Board; similar standards of practice exist in other countries.

For the rest of the year, we will run a series where we apply all these standards to hypothetical situations. Here is our first:

An actuary attends a company holiday party. They are chatting with a few of their coworkers and having a great time. The finance director asks the actuary how the year-end reserves are shaping up. Not thinking much of it, the actuary says, “Well, it was not a good year for us.” On Monday the actuary is called into the chief actuary’s office to discuss what was said at the party.

What parts of the Candidate’s Code apply, if any? The first two paragraphs of the code contain important definitions. “’Actuarial services’ are professional services provided to a principal by an individual acting in the capacity of an actuary. Such services include the rendering of advice, recommendations, findings or opinions based upon actuarial considerations.” Given this, the actuary’s statement qualifies as actuarial services since it is a finding or opinion. Another definition that will come in handy is that of principal: “their client or employer.” With these definitions, let’s look at two rules that may apply.

Rule 3: An actuarial candidate shall perform actuarial services with courtesy and professional respect and shall cooperate with others in the principal’s interest.
Saying it was not a “good year” was not in the principal’s best interest and not typical professional communication.

Rule 1: An actuarial candidate shall act honestly, with integrity and competence, to uphold the reputation of the actuarial profession.

This one is less black and white, but this communication would not necessarily “uphold” the profession’s reputation.

For credentialed CAS members, the CAS Code of Professional Conduct would apply. Precept 1 of the Code is the same as Rule 1 of the Candidate’s Code, so the previous paragraph would apply. There is also a section titled “Communications and Disclosures.” Saying “it was not a good year for us” would be considered a communication and Precept 4 would apply.

Precept 4: An Actuary who issues an Actuarial Communication shall take appropriate steps to ensure that the Actuarial Communication is clear and appropriate to the circumstances and its intended audience and satisfies applicable standards of practice.

In this situation, the actuary did not ensure that the communication was clear or appropriate given the circumstances.

Regarding ASOPs (which only applies to work done in the U.S.), an obvious one that may apply is ASOP 41: Actuarial Communications. Most aspects of this ASOP apply to the situation. Specifically, Section 3.1.1 Form and Content should have been considered:

The actuary should take appropriate steps to ensure that the form and content of each actuarial communication are appropriate to the particular circumstances, taking into account the intended users.

This was not appropriate content given the circumstances. In addition, 3.1.2 Clarity applies to this situation:

The actuary should take appropriate steps to ensure that each actuarial communication is clear and uses language appropriate to the particular circumstances, taking into account the intended users.

The communication was unclear and likely elicited more questions than answers. Consider also 3.6 Oral Communications:

When the actuary is providing an oral communication, the actuary should consider the extent to which (if any) the disclosures listed under section 3.4 should be included in the oral communication and include each such disclosure if appropriate in the particular circumstances. Where the actuary has a concern that the oral communication may be passed on to other parties, the actuary should consider following up with an actuarial document.

Given that this information has already been passed on to others, the actuary should follow up with their findings and ensure that all the rules in ASOP 41 and the Code are followed.

An innocent comment led to being called into the Chief Actuary’s office (for what I can only assume was a difficult conversation). The Code of Professional Ethics for Candidates, the CAS Code of Professional Conduct and the ASOPs are there to help and guide actuaries. By learning about these standards, actuaries can avoid uncomfortable situations and ensure that they are holding up the reptation of the actuarial profession. It’s also worth noting that not all these standards are black and white to apply. You may disagree with some of the rules that I think apply in this situation, and that is okay! What’s important is that we all know what standards we are bound by and do our best to uphold them.