A Show of Hands

A PERSON CLOSE TO OUR PROFESSION recently told me that when a roomful of actuaries was asked if they could quote Precept 1 of the Code of Professional Conduct, not a single hand was raised. Now, I am guessing that anyone who reads Contingencies on a regular basis knows that Precept 1 says, “An Actuary shall act honestly, with integrity and competence, and in a manner to fulfill the profession’s re­sponsibility to the public and to uphold the reputation of the actuarial profession.”

Some of you would score extra credit by recognizing that Annotation 1-1 adds, “An Actuary shall perform Actuarial Ser­vices with skill and care!’ While the Code contains 14 precepts with multiple annota­tions, none of the other 13 can be violated easily without also violating Precept 1.

One of my most pleasant volunteer positions within the profession has been to facilitate both the Society of Actuar­ies (SOA) Fellowship Admissions Course and the SOA Associates Professionalism Course (note: other actuarial organi­zations have similar courses). I enjoy seeing the new people coming into the profession, with their enthusiasm and excitement (and not a pocket protector in sight). Of course, an important part of these courses is to go through the Code of Professional Conduct, precept by precept. The participants consider real­world situations in which they might confront circumstances that could put them in danger of violating the Code. When these (generally younger) new professionals read Precept 1, they stop just short of saying “duh” out loud. I’m positive they say it under their breath. After all, why would one study hard, land a great job, and not perform professional duties with “skill and care”?

That was my response to the person who told me that no one could quote Precept 1. It’s because we all think it’s a no-brainer, or maybe we just don’t know the precepts by number. In any case, I’m confident that most actuaries not only know that they should use honesty, in­tegrity, and competence in their work; they actually do it. Certainly the new professionals view it that way. They sometimes have a hard time envisioning why you would ever change an answer, fail to work cooperatively with the for­mer appointed actuary, or be in such a rush to complete a project that you fail to examine the data thoroughly.

One benefit of using the case study method is to have actuaries consider, in a safe environment, how they might respond if they were asked to do some­thing that they viewed as a potential violation of the Code. Members of the Actuarial Board for Counseling and Dis­cipline (ABCD) frequently speak at local actuarial clubs to give seasoned actuar­ies a chance to learn from the case study method as well.

Owning Precept 1

Still, actuaries do occasionally violate the Code, some with full knowledge of the Code and others from lack of familiarity. If they didn’t, I wouldn’t be able to par­ticipate in another very rewarding (note that I didn’t say pleasant) volunteer ex­perience: being a member of the ABCD. Almost every time the ABCD receives a request for guidance, the person calling actually knows the right answer. The call­er is just looking for someone with whom he or she can talk through the situation. It’s also telling that when the ABCD re­ceives a complaint, the alleged violation of the Code often begins with a violation of Precept 1. Quite simply, the actuary failed to use “skill and care,” did not act honestly with integrity and competence, failed to uphold the profession’s respon­sibility to the public, and/or failed to act professionally. While other precepts gen­erally also will have been violated-such as not being qualified (Precept 2) or not following the applicable actuarial stan­dards of practice (Precept 3)-they all lead back to Precept 1.

A topic that is gaining much more in­terest these days is continuing education ( CE). In particular, members of the ABCD are finding that the documentation of ac­tivities in which an actuary participated in order to fulfill CE requirements can be scanty at best. In many cases, the ABCD is beginning to ask for such documenta­tion from the subject actuary ( one against whom a complaint has been made). We also are beginning to ask for such docu­mentation from investigators in order to increase their credibility during the in­vestigation process.

A strong CE requirement is a critical component of being a self-regulating pro­fession. Again, going back to Precept 1, it is part of upholding the reputation of the profession. However, some actuaries may feel that they are doing the same work, in the same way, using the same tools that they have used for decades, and therefore don’t need CE. Given the ongoing updates to the actuarial standards of practice, as well as the continually changing regula­tory and economic environment, every actuarial specialty is experiencing the need for skills refresher courses.

At the same time, actuaries need to take some type of professionalism course each year to satisfy the three­hour requirement for professionalism in the general qualification standard. All actuarial organizations are making this easy with a wide variety of online, on-de­mand, and in-person educational events.

Every actuary should read the Code of Professional Conduct at least once a year, paying special attention to Precept 1. It gives you a great measuring stick for every activity you undertake in your pro­fessional life.

And if you are ever sitting in a room­ful of actuaries and someone asks if you know what Precept 1 says, please raise your hand!

NANCY BEHRENS,a fellowof the Society of Actuaries, a member of the Academy, and a member of the Actuarial Board for Counseling and Discipline, is vice president-life/health and mutual funds for State Farm Insurance Cos. 

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