Professionalism Counts, June 2018
Self-Regulation of the U.S. Actuarial Profession:
By Cecil Bykerk
A Model for the World
Past President, American Academy of Actuaries
Over the course of two weeks, much was said about the state of the global actuarial profession and the various stages of development of the profession around the world. Having prepared a presentation for the ICA on self-regulation in the United States, I was struck during these meetings by how the development of U.S. self-regulation could serve as a model for actuarial professions in other countries. Why? Because, like actuaries in many countries today, U.S. actuaries were also once without a professionalism infrastructure, without the recognition of regulators, without robust standards, and without a smoothly functioning discipline process.
At ICA, I described the historical development and current status of U.S. actuarial professionalism. I emphasized that our standards of conduct, qualification, and practice, in concert with the counseling and discipline process, help to protect the public and have earned the trust of regulators and other key stakeholders and contributed to the credibility of the profession in the United States. But reaching this point took many years. After founding the Academy in 1965, the profession engaged in a systematic, decades-long effort to create the building blocks of self-regulation we enjoy today. By the early 1970s, U.S. regulators began to recognize the importance of actuarial solutions to the fundamental issue of financial security.
This recognition has been interlinked with the Academy’s steady progress in helping the profession to gain the public’s trust through the development and promotion of U.S. actuarial professionalism. My overview included the Academy’s forging of a single Code of Professional Conduct, which has been adopted by all five of the U.S.-based actuarial organizations and is binding on all of their members. I also described the central role the Academy has played in the development of a comprehensive set of qualification standards and in the formation—within the Academy—of the Actuarial Standards Board and the Actuarial Board for Counseling and Discipline.
This history is well-known to many U.S. actuaries. At the kickoff of the IAA meeting, for example, we learned that 55 percent of IAA full-member associations have fewer than 200 members. Actuaries in other countries are actively seeking their regulators’ recognition of the importance and value of actuarial solutions. Consider, for example, the words of Ms. Ntando Mabuza from Eswatini (known until April 2018 as Swaziland), who was recognized at the ICA as the “100,000th actuary.” At the ICA’s launch event, she stated that much work remains to be done in her country to sensitize government and financial industry leaders to the importance of the actuarial profession and said that she hoped to hear from other actuaries “who have grown the consciousness of the importance of the profession in their countries.”
In many discussions held during the meetings, there was a focus on the efforts of local associations in countries with nascent actuarial professions to implement codes of conduct and internal regulations on qualifications and competence. Many of these associations are adopting standards of practice (which is not a prerequisite to becoming a member of the IAA). It seemed to me that, as happened in the United States, actuaries in many different countries are realizing that to gain credibility and recognition of our value, actuaries must first earn the public’s trust, and that the public’s trust in actuaries can be earned only when actuarial professionalism is strong.
I happened to give my ICA address on self-regulation after a joint presentation on “model standards” by representatives from the IAA and the Actuarial Association of Europe. I pointed out to the audience that the self-regulation of the U.S. actuarial profession could serve as a different model or “case study” on how local actuarial associations in other countries can develop professionalism institutions in their respective countries. Thinking back on my experience in Berlin, the tale of these two meetings convinced me that the 50 years of continuous efforts by thousands of U.S. actuaries to develop actuarial professionalism through the Academy has been successful and that the actuarial profession in other countries may benefit by considering the U.S. model of self-regulation as a means of serving the public.
Bykerk was president of the Academy in 2012–13.
(Featured in the June 2018 Actuarial Update.)