Professionalism Webinar: The Code of Professional Conduct—Learning from the Mistakes of Others
More than 2,000 people attended the Academy’s June 18 professionalism webinar, “The Code of Professional Conduct—Learning From the Mistakes of Others,” which walked attendees through mistakes that have landed actuaries on the wrong side of the Code of Professional Conduct.
Academy President-Elect Shawna Ackerman kicked off the webinar with a quote from Eleanor Roosevelt: “Learn from the mistakes of others. You can’t live long enough to make them all yourself.” With that in mind, Ackerman, along with Past President Cecil Bykerk and Vice President for Professionalism D. Joeff Williams (nominated in May to be the Academy’s next president-elect), gave examples of violations of the Code pulled from Academy public discipline notices.
In a discussion on professional integrity, Bykerk gave overviews of Precepts 1, (Professional Integrity), 6 (Disclosure of Compensation), 7 (Conflict of Interest), and 9 (Confidentiality). Precept 1 is the most frequently violated precept, and even behavior not related to actuarial services can constitute a violation, he noted. For example, one actuary was suspended after knowingly importing, transporting, and selling counterfeit computers, and several actuaries have been disciplined in cases involving convictions for fraud.
Williams focused on Precept 1’s competence aspects, and Precepts 2 (Qualification Standards), 8 (Control of Work Product), 11 (Advertising), and 12 (Titles and Designations). In one case, an actuary was suspended for five years for failing to use appropriate methodology, apply appropriate tests for reasonableness, document work, state relevant actuarial assumptions, and disclose the limitations of his analysis. Several actuaries have been disciplined for failing to meet continuing education (CE) requirements or for doing work they were not fully qualified to do. Williams reminded the audience of the “look-in-the-mirror” test.
“It’s not purely subjective. You’ve got to really examine—objectively— your own professional qualifications. Have you done the basic education? Have you done CE? Do you have the experience? You need to make a judgment call whether you meet the U.S. Qualification Standards and your obligations under the Code,” he said.
Ackerman discussed Precepts 3 (Standards of Practice), 4 and 5 (Communications and Disclosure), and 10 (Courtesy and Cooperation). Failing to satisfy an actuarial standard of practice (ASOP) is a common complaint before the Actuarial Board for Counseling and Discipline (ABCD), she noted. Allegations falling into this category have included failure to understand and consider applicable law, material errors, inadequate support for assumptions, and using assumptions that conflict with or ignore experience. Actuaries have also been disciplined for inadequate communication.
A question was asked during the Q&A portion of the webinar as to what an actuary should do if he or she does a reserve review following the applicable standards, and another actuary doing the same review with the same data gets different results. Ackerman suggested “having a very candid conversation with your principal about the nature of actuarial reserves estimates and ranges. If you are given the opportunity, take the two analyses, line them up, talk about the assumptions that were made, and compare and contrast them. If they are both reasonable, fully acknowledge that you’re going to have different results.”
Bykerk examined Precepts 13 and 14 (Violations of the Code). Precept 13 requires an actuary to report apparent, unresolved, material violations of the Code to the ABCD. One actuary received a two-year suspension for failing to report such a violation while publicly making accusations of such violations. The fact that the actuary did not cooperate fully with the ABCD, as required by Precept 14, was likely another factor in his suspension. “It’s important to remember that ‘ABCD’ includes a ‘C,’ which is for ‘counseling,’” Bykerk said. “The ABCD stands ready to address questions people have. If you have a question, you can get in touch with the ABCD through the website,” he reminded attendees.
Ackerman encouraged actuaries to take advantage of the support available to help practicing actuaries do their work in accordance with the Code. “Because we do important work, we owe it to the public and to each other,” she said.
Williams noted the Code sets high standards for the profession. “People look to us to provide quality work, to provide answers to difficult questions, and with that comes a high expectation. … We’re not just data scientists—we’re actuaries, and we have a code of conduct,” which is important not just to clients and principals, but to the general public as well, he said, adding that “the Code allows us to be self-regulating, and that’s a very honorable thing that we should take seriously.”
“Self-regulation is really critical to us in the U.S.,” Bykerk added. “I believe that we can operate much better through self-regulation, and there are examples where other actuarial organizations around the world have lost the ability to self-regulate.”
Slides and audio of the webinar are available to Academy members free of charge.
Featured in the June 2018 Actuarial Update.