Any actuary should be concerned about compliance
with requirements and dependence on a peer review process.
As with most professions, the peer review process
is an aid and a potential preventive, but not a shield.
learned of the company’s acceptance of
the poor report? In addition, is the existence of the internal peer review process
sufficient defense for the complaint?
These are difficult questions that arise
from a complicated matter. Precept 13 of
the Code of Professional Conduct states:
An Actuary with knowledge
of an apparent, unresolved,
material violation of the Code by
another Actuary should consider
discussing the situation with the
other Actuary and attempt to
resolve the apparent violation. If
such discussion is not attempted
or is not successful, the Actuary
shall disclose such violation to
the appropriate counseling and
discipline body of the profession,
except where the disclosure would
be contrary to Law or would
divulge Confidential Information.
In addition, Precept 3 states:
An Actuary shall ensure that
Actuarial Services performed by
or under the direction of the
Actuary satisfy applicable
standards of practice.
Brian did report his issues to the appropriate actuaries within the firm. But
should he have gone further? When he
discovered that the work was approved
by another actuary at the firm and his
objections had been dismissed, he was
put in a difficult position. After raising
objections internally and presumably
discussing the work with the signing
actuary, did he have a duty to report the
incident to an appropriate disciplinary
body? The firm had used the questionable method in multiple reports.
There was a defined and documented
peer review internal to the firm. These
documents would be part of any investigation into the subject actuary’s and,
therefore, the firm’s practices. The peer
review materials themselves would be
considered an actuarial communication
and subject to appropriate Actuarial
Standards of Practice, requiring documentation. (See ASOP No. 41, Actuarial
Communications.) No doubt there were
confidentiality requirements involved.
Individual client work is likely to be
subject to confidentiality agreements
that Brian should not breach. With this
as a paramount concern, it was not appropriate for Brian to presume that he
was required to make such disclosures
or file a complaint.
Brian was further concerned that
his own work might have the type of
issues that he noted in the work he had
questioned. He joined a large firm to
give himself peace of mind that a proper
and full review of his work products
would be conducted. He now questions
that assumption. While he has come to
rely on the peer review process, Brian
is ultimately the responsible party for
any report he signs. He reread Precept 3
carefully.
An Actuary shall ensure that
Actuarial Services performed
by or under the direction of
the Actuary satisfy applicable
standards of practice.
This standard states that any work
performed by an actuary is the respon-
sibility of the actuary. Having someone
review his work and indicate that it is
fine, therefore, does not absolve Bri-
an of responsibility for any errors or
questionable assumptions in his work
product. The firm may be satisfied that
its procedures are followed, but that
would not be a defense in any disci-
pline process.
JANET FAGAN is vice chairman of
the Actuarial board for Counseling and
discipline (AbCd) and has more than 35
years of actuarial experience focusing
on property and casualty insurance. now
retired, she was chief actuary for Sentry
Insurance Co. and served two terms
as an elected member of the Casualty
Actuarial Society board of directors.
