Actuarial pricing, capital modelling and reserving

Pricing Squad


Issue 19 -- October 2017

Welcome back to Pricing Squad!

Pricing Squad is a newsletter for fellow pricing practitioners and actuaries in general insurance.

Today's issue is about the new Actuaries' Code.

I am also sharing a Carver demo so you can decide whether this non-linear modelling tool is right for you.


Carver demo

Do you need to review minimum premiums, experience rating logic or other non-multiplicative rates quickly?

Is your claim data less granular than your policy data (e.g. fleet exposure recorded by vehicle type but claim data only on combined policy level)?

Carver is there to help. Watch this complete insurance pricing project in Carver. From data to rates in under 20 minutes.


The Actuaries' Code 2017

The Actuarial Profession is conducting a consultation on changes to the Actuaries' Code.

I encourage you to oppose the potentially unlimited scope of the "speaking up" principle.

You can make your contribution on www.actuaries.org.uk. You can also attend a consultation meeting in London on Monday 30 October or in Edinburgh on 7 November.

Below is my contribution with a summary of the new Code.

A general comment first. People loose respect for laws which change too frequently. This Actuaries' Code is the third version in the last few years.

Integrity

You must be honest and respectful. No real changes here.

Competence and care

You can only undertake work if you have enough competence and then carry it out with care. In the past, this responsibility could be shared with your supervisor but not anymore.

Impartiality

Avoid and disclose conflict of interest. No big change here.

Compliance

Now you have to disclose to the profession any criminal or civil convictions or regulatory disciplinary determination.

So if you get convicted for littering The Profession wants to know about it. Why?

Speaking up

This principle compels you to report others if you have reasons to believe that their actions are "unethical or unlawful".

I understand "unlawful" (although what is lawful and what isn't may not be obvious).

But "unethical"? What if I have reasons to believe that my CRO cheats on his boyfriend (no doubt an unethical action). Do I really need to "speak up"?

Yes, The Code explicitly extend this to "unethical" behaviour in people's private lives, see extended Guidance, par. 7.11. While materiality can be debateable, I find this 1984 principle unacceptable. Member's private lives should be protected from Staple Inn administrators whose business they are not.

Communication

You must communicate clearly, accurately, timely and make some effort to verify that people understood you. The emphasis on the latter will now be explicit.

Speaking of clarity, The Code should avoid "and/or" where it places real burdens on real people. I do not understand "and/or". Please decide what you want to say and then say it clearly.

That is all for today. Thank you for reading!


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