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brIAn HAS been eMPloyed AS An ACtuAry For MAny yeArS.
After a long period working at an insurance company, he decided to
become an independent consultant. While his private practice thrived,
he became concerned that as a sole practitioner, he might be vulnerable
to mistakes and incomplete analyses. these problems, though likely
unintentional, could result in violations of actuarial standards.
Brian discussed these concerns
with other independent consultants in
his professional network. A group of
them agreed to provide reviews of each
other’s work on a regular basis as part
of their quality control process. After
participating in the reviews for several
years, Brian grew uneasy. He was responsible not only for his own work but
also, as a peer reviewer, that of others.
Too often he had seen what he consid-
ered to be subpar work presented for his
review. When he shared his comments
and critique, he met with a lot of de-
fensive responses. He also was not able
to follow up to see what changes may
have been incorporated in the final work
products. In addition, Brian believed
that his own work often was given cur-
sory review by his peers.
Brian decided to join a large consulting
firm, at which he would have a better review process for his work. He also would
be able to engage with other actuaries regarding his work and participate in the
review of others’ work products.
Things went smoothly for some
time. Then the other shoe dropped.
He saw a work product that he thought
was poorly done. When he informed
the author of his issues with the methods and assumptions underlying the
analysis, he was told that the report
met the firm’s guidelines for work of
this nature. Brian’s appeals to senior
members of the firm went unanswered.
He eventually found out that another
actuary had given the go-ahead to issue what Brian believed was a subpar
report. This apparently was company
practice and met the requirements of
the firm’s internal peer review process.
As Brian considered his options,
the client who received the report in
question had the work reviewed by an
independent actuary. The independent
review found multiple problems with
the methods and assumptions underlying the work. The client made several
attempts to discuss the report—and potentially amend it—with the signing
actuary. These requests were met with
a response that there was extensive
peer review within the firm and the
report would stand as issued. A formal
complaint was filed with the Actuarial
Board for Counseling and Discipline
(ABCD) by the client.
The subject actuary and the firm
responded to the complaint with a detailed description of the firm’s peer
review process. The use of the objectionable methodology also was
defended as common and acceptable
practice by this large firm. Some of
the firm’s literature, in fact, cited the
method as a novel way of addressing
the issues underlying the report.
This scenario raises several concerns. Among others, what were Brian’s
responsibilities, if any, as regards the
Code of Professional Conduct when he