Kevin Dyke, chairperson of the Actuarial Standards Board, reflects on the board’s accomplishments and its role in guiding actuaries through evolving practice areas, regulatory expectations, and emerging risks.
In a time of evolving practice and emerging risks, Kevin Dyke, chairperson of the Actuarial Standards Board (ASB) and chief actuary with the Michigan Department of Insurance and Financial Services, has helped champion the standards of practice that shape how actuaries uphold professionalism and public trust.
Now in the last year of his last term as ASB chairperson, Dyke has also served on many Academy committees, including the Committee on Equity and Fairness and the Committee on Cyber Risk, as well as acting as ASB liaison to multiple actuarial standards of practice (ASOPs) task forces and to the Council on Professionalism and Education (COPE).
In this conversation with Contingencies, Dyke reflects on the ASB’s progress, the value of the standards to the profession, and his vision for the future of actuarial practice.
As your tenure as chairperson nears its end, what accomplishments of the ASB are you most proud of during your years of service?
I am amazed every day by the efforts of my fellow ASB members and the hundreds of volunteers across our various committees and task forces. Our work is crucial to preserving and strengthening our self-regulatory framework. During my tenure on the ASB, we have promulgated 18 new or revised standards, with a dozen more in the pipeline. As chairperson, I have led the implementation of measures to streamline our review of proposed standards, improved and harmonized language common to most standards, and reviewed literature and current practices regarding artificial intelligence (AI) to determine if changes to the standards were needed. I expect these initiatives will continue after my term, especially given the rapid evolution of artificial intelligence.
The ASB is an independent body that resides within the Academy’s structure. What do you want actuaries to know about the value this structure provides to them and the profession and how, if any, has your view changed since you’ve been a member and chairperson of the ASB?
My roots with the Academy began as the Casualty Actuarial Society’s liaison to the Council on Professionalism (now Council on Professionalism and Education) in 2010, so I have admired and appreciated the work of the ASB for years. However, even as a close observer, I didn’t fully grasp the value the standards bring to the broader actuarial community. Early in my career, I viewed the standards as a compliance requirement—the “rules of the road”—which they are, as Precept 13 of the Code binds us to follow them. Yet, as a member of the ASB and now its chair, I hear more from my colleagues, both regulators and non-regulators, that the standards are an invaluable tool in an actuary’s toolbox, helping them to navigate difficult actuarial problems. I often say or hear from others that the “standards are your friend,” meaning that, just as you would seek advice from a trusted friend, you can seek guidance from the standards.
To date, the ASB has adopted 58 standards of practice in its 37-year history. What’s your vision for the future of the ASB, and what do you see as its biggest opportunities and challenges in the coming years?
The future of the ASB and the standard development process is secure. The standards are time-tested, as became especially evident during the COVID-19 pandemic. Culturally, we faced unprecedented challenges in mortality, health care, and economic security. The actuarial community was prepared to address these challenges with the support of our standards. For example, in the Considerations for Handling Auto Insurance Data in the Era of COVID-19 issue brief, we identified seven ASOPs that provide helpful guidance to the actuary with respect to data limitations, communicating important disclosures, and other technical issues related to the pandemic. While the standards will continue to evolve as actuarial practice evolves, they have demonstrated resiliency even in the most challenging circumstances.
The Code of Professional Conduct, the U.S. Qualification Standards, the actuarial standards of practice, and the discipline process are essential elements of the actuarial profession’s framework for self-regulation.
Where do you see gaps, if any, and how might those be addressed through future ASOPs or other professional guidance?
One of the best summaries of our professionalism framework is found in former Academy President Tom Wildsmith’s series on the “web of professionalism,” summarized in the 2017 discussion brief, The Academy and the Web of Professionalism. The web visual illustrates how the USQS, ASOPs, and the discipline process weave together to help actuaries meet their obligations under the Code of Professional Conduct and solidify our self-regulatory framework. But the web is not static; the ASOPs, the qualification standards, and the ABCD are routinely tested with societal changes and evolving actuarial practice, with “strands” added or removed as needed.
In addition to setting standards for appropriate actuarial practice in the United States, how else do you feel the ASB has impacted the Academy’s success?
A key aspect of the Academy’s mission is the advancement of professionalism in serving the public and the profession. Being a part of the Academy’s professionalism framework facilitates collaboration with our ABCD and Committee on Qualifications colleagues, which further strengthens the framework—advancing the Academy’s mission. Additionally, the ASB routinely participates in the Academy’s professionalism webinars; ASB webinars have been attended by as many as 900 actuaries and interested parties.
Finally, the ASB serves as a liaison to the Committee on Professionalism and Education, which facilitates collaboration not only within the Academy but also with the other actuarial organizations served by the ASB.
How do you see the ASB’s role in helping actuaries navigate complex societal issues while maintaining professional objectivity?
I mentioned previously the example of the COVID-19 pandemic and the resilience of the actuarial community in its response. Opinions varied widely on how governments and people should respond to the pandemic. With the help of the standards, actuaries were uniquely positioned to provide objective advice, avoiding the political narratives. While I don’t foresee another pandemic, the profession is well-positioned to provide objective advice on future issues as they arise.
If you could change or improve one thing about how the profession approaches professionalism, what would it be?
We have a strong ethical culture in our profession, largely due to the continuous efforts of the Academy and other organizations to educate and inform actuaries about the importance of following the Code and ASOPs. The actuaries I’ve worked with, both managers and colleagues, have consistently demonstrated professionalism, instilling the same values in me. Providing managers with a toolkit for coaching aspiring actuaries to develop a professionalism mindset would benefit our profession, our principals, and the public.
As a regulator, how do you view the role of self-regulation and the guidance ASOPs provide the profession and broader stakeholder community?
Regulators greatly value the guidance ASOPs provide to actuaries, often incorporating ASOPs in statutes, regulations, and compliance instructions. Many states, including Michigan, require rates to be developed following applicable actuarial standards of practice, regardless of whether an actuary is responsible for the rate filing. Compliance with the standards promotes actuarial soundness of company rating plans.
As a regulator and actuary, I not only produce actuarial work for my insurance department but also serve as an intended user of rate and model filings submitted for approval. My regulatory colleagues and I share frustrations about some actuarial work products received from company actuaries that fail to meet the requirements of legal requirements and/or the ASOPs.
While Precept 13 requires us to report apparent, unresolved, and material violations to the ABCD (if such reporting is not contrary to law or divulges confidential information), we are encouraged to first address any issues with the actuary. The legal and confidential barriers can hinder reporting violations. However, as regulators we have more tools than the average intended user or principal due to our oversight of regulated entities. We can alert the company to our concerns about the actuary’s work or report not meeting the standards, prompting them to address the issues their actuary. Companies understand if our concerns are not addressed, we can deny the rate filing, require its withdrawal, or, in the case of an actuarial opinion, require the company to pay for a second actuarial opinion.
For issues that are more widespread, among many companies and actuaries, regulatory guidance can be issued. In my experience, these tools are effective mechanisms to ensure actuaries use appropriate methods and assumptions and issue communications that meet regulators’ needs.
How has stakeholder feedback influenced ASB decisions during your tenure? Can you share some examples?
Stakeholder feedback is essential for the development of new or revised ASOPs. We expose proposed standards to the actuarial and broader stakeholder community to ensure the guidance is appropriate, relevant, and improves actuarial practice. If feedback necessitates significant revisions, we will re-expose the standard.
We particularly value feedback from regulators, industry groups, and consumer groups who rely on actuarial work products. Incorporating this feedback into the standard development process helps actuaries meet their professional responsibilities to their principals and intended users, thereby benefiting the public.
What advice would you give to the next ASB chairperson to build on the progress made during your leadership?
I’ve had the privilege of observing three effective chairpersons who preceded me: Kathy Riley, Darrell Knapp, and Rob Damler. All demonstrated the ability to balance the importance of receiving effective contributions from all ASB members, regardless of practice area, with managing the pipeline of draft standards. For example, we spent several meetings before and after I became chairperson reviewing the proposed second exposure of ASOP 41 to achieve consensus on the changes, as several areas of guidance departed significantly from the first exposure draft. I believe this balance is crucial to developing appropriate guidance to actuaries on a timely basis.
Looking ahead, what emerging risks or evolving practice areas do you believe will most influence future actuarial standards?
It would be impossible to answer this question without discussing AI, which I mentioned earlier. Currently, the ASB believes our standards provide sufficient guidance with respect to artificial intelligence but is prepared to make changes as necessary. The unprecedented COVID-19 pandemic demonstrated the resilience of our standards amid tremendous uncertainty and data limitations. Our standard development process is principle-based, deliberate, and transparent so that standards remain useful to actuaries in the ever-evolving landscape of financial security systems.