For our final installment of the Practical Professionalism series, we’re going to look at the following hypothetical scenario:

An actuarial analyst creates and documents a model to be used for pricing and then rotates to another department. They are extremely busy in their new role when the pricing team begins to file the new pricing model they created. Despite having documented the model, the pricing team has numerous questions and reaches out to the actuary. The analyst, being too busy with work on their new team, tells pricing that answers to their questions can be found in the documentation without confirming that this is true.

What are the professional duties of this person if they are an actuarial candidate? Are there differences if the person has an ACAS or FCAS?

Candidates are required to abide by the Code of Professional Ethics for Candidates, and in the Code, Rule 3 may apply to this situation, which states:

An actuarial candidate shall perform actuarial services with courtesy and professional respect and shall cooperate with others in the principal’s interest.

In this scenario, the principal would be the company that the actuary works for, and while they are doing work for the principal in their new role, it would be in the principal’s best interest for them to also help pricing with the model. Even if the answers to the questions are in the documentation, it is not clear enough for the pricing team to find the answers on their own, and the actuary should take the time to help them.

CAS members must adhere to the Code of Professional Conduct. Precept 10 in the code is equivalent to Rule 3 above, and therefore also applies in this situation.

In addition to violating Rule 3 and Precept 10, I would also argue that the actuary is violating Rule 1 of the Code of Professional Ethics for Candidates:

An actuarial candidate shall act honestly, with integrity and competence, to uphold the reputation of the actuarial profession.

The application of this rule to our hypothetical situation falls into a grey area, but I believe that not attempting to answer questions on prior work product would be considered working without high levels of integrity. This is also the same verbiage of Precept 1 in the CAS Code of Professional Conduct that applies to members of the CAS.

Precept 3 of the Code of Conduct requires CAS members to follow all applicable standards of practice. In terms of ASOPs (Actuarial Standards of Practice) that may apply in this situation if the work is U.S. based, all actuaries involved in this scenario need to abide by ASOP 56, “Modeling.” The actuary who created the model and corresponding documentation, needed to follow 3.7 Documentation which states:

The actuary should consider preparing and retaining documentation to support compliance with the requirements of section 3 and the disclosure requirements of section 4. If preparing documentation, the actuary should prepare such documentation in a form such that another actuary qualified in the same practice area could assess the reasonableness of the actuary’s work.

There is not enough information in our scenario to know if this was followed, but it’s good to keep it in mind.

In addition, the actuaries using the model need to abide by ASOP 56 section 3.4 Reliance on Models Developed by Others:

If the actuary relies on a model designed, developed or modified by others, such as a vendor or colleague, and the actuary has a limited ability either to obtain information about the model or to understand the underlying workings of the model, the actuary should disclose the extent of such reliance. In addition, the actuary should make a reasonable attempt to have a basic understanding of the model….

In this scenario, it seems as if the actuaries using the model are doing their due diligence to understand the model and how it was built. By reading the documentation and asking additional questions, they are following ASOP 56. Note: While this article talks about ASOP 56, other ASOPs could apply.

This type of hypothetical situation likely arises frequently, with rotations to other teams (or even someone leaving for a new company). It would be wise to always remember that, whether you are a candidate or a member of the CAS, there are professionalism standards that you must adhere to.