Professionalism, ethics and communication of actuarial advice
The framework
- Actuaries' Code (IFoA): five fundamental principles - integrity, competence and care, impartiality, compliance, and speaking up - supported by technical and professional standards.
- FRC TAS 100 (principles for technical actuarial work) and TAS 200 (insurance) require you to address data, assumptions, models and communication, and to be transparent about limitations.
- APS X2 requires review of actuarial work proportionate to its significance, with appropriate independence of the reviewer.
- Consumer Duty makes fair value and good customer outcomes a conduct obligation, so pricing advice cannot be separated from customer outcomes.
Communicating advice
State the question, the recommendation, the key assumptions, the range of outcomes and the limitations. Quantify uncertainty: a range or a probability is more useful than a false point estimate. Separate fact from judgement. Record what you were asked and what you did not do. If asked to sign off something you believe is misleading, document your objection and escalate - to the board, the audit committee, or the regulator where the Code requires it.
Worked example
A board wants a 2% PMI increase when the model indicates 5%. The 2% option cuts projected SCR coverage from 145% to 118% over three years, with roughly a 1-in-8 chance of falling below 100%. Present both options with these numbers, state the assumption that medical inflation stays at 7%, and record the board's decision. That is advice, not obstruction. Signing a paper asserting that 2% is sufficient would be a different matter.
Traps
A single point estimate with no uncertainty; working outside competence without support; changing assumptions under commercial pressure without disclosure; omitting the peer-review trail; confusing advice to the board with the interests of policyholders.