This is the third installment of our Practical Professionalism series, where we use an example to discuss what professionalism means to actuarial candidates. The primary areas of focus are the Code of Professional Ethics for Candidates and the CAS Code of Professional Conduct which applies to CAS members, along with the Actuarial Standards of Practice (ASOPs) that an actuary must follow (or similar if practicing outside the U.S.).

Here is our hypothetical scenario:

An actuarial candidate has just begun a new job at a different company. The actuarial department was halfway through a reserve analysis when the prior actuary left, and the actuarial candidate is feeling pressure to pick up and finish the analysis quickly. Complicating matters, this is a line of business that the candidate has not worked with directly before, but they are hesitant to ask their supervisor a lot of questions in case it looks like they can’t do the job. The actuarial candidate uses the prior actuary’s data and work without reviewing or checking it and finishes it using their own limited knowledge.

This is a situation that happens all the time. You jump into a new role and want to start contributing right away. You feel pressure (whether it’s internal or external) to get things done, and that can lead to cutting corners. What parts of the Candidate’s Code apply here? I would argue that Rule 1 is being at least somewhat violated. An actuarial candidate is charged to act “with integrity and competence.”  Picking up someone else’s work without at least checking it is not acting with the highest integrity. Since this is an unfamiliar line of business to the candidate, they should be working closely with their supervisor on the analysis, rather than displaying a reluctance to ask questions.

Several ASOPs could also apply to this work. In particular, ASOP 41 focuses on Actuarial Communications, including oral communications. This ASOP would require the candidate to disclose their reliance on the prior actuary’s work at the very least, including each material assumption and method where they relied on another. The ASOP also requires that the actuary make a judgment about the reasonableness of the prior actuary’s work unless they are not qualified to do, which again, they would need to disclose.

ASOP 23, Data Quality, could also come into play here. This ASOP requires the actuary to select appropriate data for the reserving analysis. If the actuarial candidate is relying on the prior actuary’s data without checking, then they will be unable to make sure the data is appropriate. Similarly, ASOP 43, P&C Unpaid Claim Estimates, also requires actuaries to consider the reasonableness and appropriateness of each method, model, and assumption used.

A better course of action for our newly hired actuarial candidate would be for them to meet with their supervisor before starting the work and disclose where they need guidance in this reserving analysis. They should also review the prior actuary’s work in as much detail as time allows, to make sure they understand the data, assumptions, and methods used. This will allow them to make a good start with their new employer, turning in a work product they can stand behind.