Contingencies Online - July/August 2011

actuaries could be subjected to interna-
tional standards of practice that might
conflict with U.S. standards.

Meeting notes
The subject of international standards for
actuarial practice dominated the IAA’s
semiannual meeting in Vienna, Austria, in
late 2010. At that meeting, the delegates
from the five U.S.-based actuarial organi-
zations continued to emphasize the U.S.
profession’s position that any internation-
al standards of practice adopted through
the IAA must be model standards—exam-
ples for associations or areas of the world
in which few or no standards of actuarial
practice exist—and that they must remain
voluntary, not mandatory.
This effort gained specific impetus
when the Actuarial Standards Subcom-
mittee of the IAA’s Insurance Accounting
Committee submitted a statement of
intent for the creation of a model inter-
national actuarial standard. Throughout
2010, the Academy worked on respond-
ing to this statement of intent to ensure
that any new model standard would be
specific to work related to international
financial reporting standards. The Acad-
emy argued that any general or generic
actuarial practices (such as documenta-
tion, communications, data quality, etc.)
that are already covered by existing U.S.
standards should be addressed separately
through a different model standard. The
IAA Council approved this course of ac-
tion at its Vienna meeting.
Much of the work is being coordinat-
ed by the IAA’s Professional Committee.
A quick look at the agenda for the April
2011 IAA meeting in Sydney, Australia,
indicates the scope of its evaluations.
The committee has produced a
number of draft documents, including
“Achieving a Common Understanding of
the Principles of Professionalism within
the International Actuarial Association,”
which was discussed in a number of
venues at the Sydney meeting. The
36-page report explores the IAA’s edu-
cational guidelines and regulations and
proposes the following definition of pro-
fessionalism: “Professionalism applies
to an actuary who applies specialist
knowledge and expertise, demonstrates
ethical behavior in doing actuarial work
and fulfills the requirements of vol-
untary membership of a professional
actuarial association.”
Another draft, “The Governance of
International Actuarial Work,” suggests
that all IAA member associations should
amend their educational requirements
to require specific coverage of issues in-
volving international work and argues
that the codes of conduct be modified to
reflect international work issues. There
are also draft papers from the IAA Due
The U.s. profession’s
position is that
any international
standards of practice
adopted through the
IAA must be model
standards .
Process Task Force, including one en-
titled “A Review of the Due Process for
International Actuarial Notes (IANs).”
The Takeaway
What does all this activity mean for U.S.
actuaries? Several things. First, it’s impor-
tant to be aware of the amount of time and
effort that the U.S. profession is investing
in this issue to ensure that your interests
are represented on an international level.
Second, it’s vital that all U.S. actu-
aries make the effort to stay abreast of
standard-setting activities both in this
country and abroad. There may be cir-
cumstances in which more than one
jurisdiction is involved or in which the
jurisdiction isn’t clear. The actuary, in
those cases, should strive to follow the
standards of all applicable jurisdictions,
which typically means following the
standard that is strictest. To do that, you
need to know the standards.
Third, you need to be diligent in deter-
mining whether, in fact, you are practicing
internationally. (You might be surprised
to discover that you are.) This is not only
because Precept 1 of the Code of Profes-
sional Conduct requires, in broad terms,
that you provide professional services
with integrity and competence. It’s also
because you could be opening yourself up
to the risk of breaching applicable stan-
dards. This could make you subject to
investigation by the Actuarial Board for
Counseling and Discipline or by a foreign
actuarial association.

CURTIS HUNTINGTON is a professor
of mathematics at the University
of Michigan in Ann Arbor. He is
chairperson of the ABCD, a member of
the Academy, a fellow of the Society
of Actuaries, and a fellow of the
Conference of Consulting Actuaries.