What Would You Do?
Five hypothetical case studies from the Actuarial Board for Counseling and Discipline illustrate the professionalism challenges actuaries may face in the workplace—and how to respond.
At some point in their career, nearly every actuary will encounter a situation that requires choosing between the ethically correct course of action and one that is more convenient.
Since its launch on Jan. 1, 1992, the Academy’s Actuarial Board for Counseling and Discipline (ABCD) has served as the profession’s primary resource for addressing questions of professional conduct and ethics. Its responsibilities include considering and investigating complaints about potential violations of the Code of Professional Conduct; providing confidential guidance to actuaries facing ethical dilemmas; recommending disciplinary action when warranted; and mediating disputes involving professional conduct.
Demand for that guidance, which is provided confidentially by ABCD members, has grown substantially. In 1993, the ABCD received just eight requests for guidance (RFGs). By 2024, that number had climbed to 96.
This article is based on the five hypothetical case studies featured in the ABCD’s 2025 webinar, Tales from the Dark Side. Although fictional, the scenarios reflect the kinds of ethical and professionalism challenges actuaries may encounter in practice. Each case poses the same question: If you were in that actuary’s shoes, what would you do?
Case 1: The Reserve Report & the Disappearing Autonomy
The situation: Judy is a newly credentialed FSA and the sole actuary at Harmony Health Insurance Co. Because she lacks the experience to serve as appointed actuary, the company has engaged a consulting actuary to review and certify the reserves. Harmony recently acquired a smaller carrier to expand its product line, and Judy’s boss, Sam—a sales executive with no actuarial background—asks her to produce a reserve calculation broken out by product line. He wants to show the board how each product contributes to profitability.
When Judy’s numbers don’t tell the story Sam was hoping for, he announces his decision to shift reserves between product lines so that every line looks profitable. He believes that the effect will be negligible because it won’t change total reserves or affect statutory financial statements. But Judy is aware that the board could make resource-allocation decisions based on this report, so she contacts the ABCD for guidance.
Professionalism considerations: What should Judy do?
Precept 1 requires actuaries to act honestly and with integrity and competence. Annotation 1-4 prohibits any professional conduct involving dishonesty, fraud, deceit, or misrepresentation or acts that reflect adversely on the actuarial profession. Precept 3 requires the actuary to ensure that his or her actuarial services satisfy applicable standards of practice. And Precept 8 calls on the actuary who performs actuarial services to take reasonable steps to ensure those services are not used to mislead other parties; Annotation 8-1 calls on the actuary to take reasonable steps to present actuarial communication clearly and limit its improper use.
To meet her obligations under the Code, Judy could take the following actions:
- Indicate in the introduction to her report that the purpose of the reserve calculation was to determine the contribution to the company’s profitability of each product line;
- Include the methods, procedures, assumptions, and data she used clearly enough that an actuary in the same practice area could objectively appraise the reasonableness of her work;
- Indicate that any mention of the report’s findings must also reference the availability of the full report.
It might also be helpful for Judy to explain to Sam that she is required to adhere to professional standards—including taking steps to prevent her work being used inappropriately—to maintain her credentials. And she could consider reaching out to the consulting actuary to support her position. The consulting actuary might also raise additional concerns later if it appears that Sam’s report to the board is inconsistent with the statutory filings.
Demand for guidance, which is provided confidentially by ABCD members, has grown substantially. In 1993, the ABCD received just eight requests for guidance (RFGs). By 2024, that number had climbed to 96.
Case 2: The Software Switch & the Problem with ‘Good Enough’
The situation: Mary is an FSA and enrolled actuary with a decade of experience performing client relationship management, benefit calculations, and annual valuations for nonqualified retirement programs. Her team has long used Bullseye, an established pension valuation system. Management wants to migrate to DoubleRing, a newer package that comes bundled with software the firm already owns—at no additional cost.
ASOP No. 56, Modeling, section 3.2 states that, when communicating a model’s results, the actuary should understand its important aspects; the weaknesses of its assumptions, methods, and other limitations that have material implications; and data and time constraints or other practical considerations that could materially affect the model’s ability to meet its intended purpose. In addition, section 3.4 requires an actuary who relies on a model designed by others to disclose the extent of reliance on it and attempt to understand the model’s original intended purpose, operation, major sensitivities and dependencies, and its key strengths and limitations.
To help her understand how the new software works and its limitations, Mary runs parallel calculations, and the results concern her. She finds that DoubleRing’s valuations are consistently 3% to 6% higher than Bullseye’s across her client base. After reviewing sample lives, she traces the discrepancy to a shortcut in how DoubleRing derives annuity factors. Mary raises her concerns with management, which suggests a compromise: She should use DoubleRing only for smaller plans, where the dollar impact of any error is presumably lower.
Professionalism considerations: What should Mary do?
The ABCD identified two potential steps Mary could take. She could continue serving her small-plan clients but clearly disclose the model’s known limitations and provide a quantitative estimate of its impact on the results. Or she could perform the valuations using alternative tools, even if the process is more time-consuming.
Each approach is consistent with established guidance: Precept 1 states, “An actuary shall perform actuarial services with skill and care.” And the discussion of materiality in ASOP No. 1, Introductory Standard of Practice, requires the actuary to “consider the purpose of the actuary’s work and how … it will be used by intended users.” Precept 8 calls on the actuary to “take reasonable steps to ensure that [their actuarial] services are not used to mislead other parties.” Finally, ASOP No. 56, Modeling, section 4.1(d) requires disclosure of a model’s weaknesses.
Case 3: The Opposing Expert & the Question of When to Act
The situation: Mona Lisa Vito, MAAA, ACAS, is serving as an expert witness for a plaintiff policyholder in a contentious federal insurance lawsuit. Before being retained, she signed a nondisclosure agreement. The defendant’s expert is Kim Wexler, MAAA, ACAS. In reviewing Kim’s expert report, Mona Lisa concludes that it violates ASOP No. 23, Data Quality, and materially violates Precepts 1, 3, and 8 of the Code. The judge has issued a gag order. Trial is a year away.
Two questions arise: Does Precept 13 require Mona Lisa to contact Kim immediately over the perceived violations? And does this guidance require her to file a complaint with the ABCD?
Professionalism considerations: What should Mona Lisa do?
Precept 13 says an actuary with knowledge of another actuary’s apparent, unresolved, material violation of the Code “should consider” discussing the situation with the other actuary but is not required to do so.
To address the second question: If Mona Lisa does not attempt to discuss the matter with Kim, or that discussion is unsuccessful, Precept 13’s second sentence applies: She “shall” disclose the violation to the ABCD. But the precept also mentions two caveats. Disclosure is not required if it would (1) be contrary to law or (2) divulge confidential information. It is possible that the judge’s gag order and the NDA Mona Lisa signed could make it inadvisable for her to share the matter with the ABCD. Both caveats warrant careful legal analysis.
In short, Mona Lisa is not required to act immediately, and the gag order may delay her obligations further. But when the legal proceedings conclude and those constraints lift, the mandatory disclosure obligation under Precept 13 will likely apply—unless the violation has been otherwise resolved.
Case 4: The Resolved Violation & What ‘Resolution’ Actually Means
The situation: Charles is an FSA hired by Ajax Life and Health Insurance Co. to conduct an independent reserve analysis as part of a company reorganization. As he digs in, he becomes concerned that the previous appointed actuary, Susan, succumbed to management’s pressure when developing reserves. By the time Charles completes his work, Susan has been transferred to another department and most senior management has been replaced.
Charles speaks with Susan directly about the issue. She acknowledges that some reserves were probably too low, reflecting optimistic assumptions the company expected would hold. Charles and the new management have since strengthened the reserve position. But Charles is still wrestling with a nagging question: Under Precept 13, which requires reporting of unresolved Code violations, does he need to report Susan? And what does it mean for something to be “resolved” when what occurred in the past cannot be changed?
Professionalism considerations: What should Charles do?
Whether an apparent violation has been resolved depends on the facts, circumstances, and the actuary’s professional judgment.
Susan’s acknowledgment that the reserves were probably too low is meaningful, but not automatically sufficient. The relevant question for Charles is whether he has reason to believe the underlying problem has genuinely been addressed—not just the numbers, but Susan’s understanding of where her professional obligations lie. If Charles comes away from their conversation confident that Susan now recognizes that yielding to management pressure on reserve assumptions was inappropriate, and that she will not allow that pattern to repeat, he may reasonably conclude the matter is resolved. And he has ensured that the reserves were strengthened, addressing the material concern.
If, on the other hand, Susan’s attitude suggests that she views the prior approach as defensible and may repeat it under similar circumstances, Charles faces a harder call. Resolution in the Precept 13 context involves not merely correcting past numbers but a reasonable expectation that the inappropriate behavior will not recur. Charles is not required to file a complaint if he genuinely believes the cause and effects of the violation have been resolved, but his decision must be based on the pertinent facts and circumstances of the case and his professional judgment.
The ABCD’s guidance function is a rare, if not unique, resource, serving as a standing reminder that the profession takes professionalism seriously—and that actuaries are expected to do so as well.
Case 5: The Actuary-Turned-Advocate
The situation: Jim is an MAAA and FSA who has spent his career as a health actuary. Recent developments in health care policy have motivated him to get more involved. He wants to create a website advocating for changes to the health care system, potentially displaying his actuarial credentials, and he may decide to run for office to address the issues he cares about. He wonders whether these activities are subject to the Code or ASOPs.
Professionalism considerations: What should Jim do?
According to the Code, actuarial services are defined as professional services provided to a principal—a client or employer—by an individual acting in the capacity of an actuary. Jim’s website advocacy, which is directed at the public, not issued to or on behalf of a client or employer, does not fit that definition. He is not performing actuarial services in the technical sense, and therefore, the ASOPs do not apply.
However, Annotation 1-4 prohibits professional conduct that involves dishonesty, fraud, deceit, or misrepresentation, or any act—professional or otherwise—that reflects adversely on the actuarial profession. In short, Jim should ensure that his advocacy is accurate and responsible. If he intends to use his actuarial credentials on the website to establish subject-matter authority, Precept 12 states that designations of a recognized actuarial organization may be used only in the manner authorized by that organization. Thus, he cannot use his FSA or MAAA to imply that his policy positions carry the profession’s endorsement.
Jim also would be wise to explicitly state that he is not issuing a statement of actuarial opinion in his advocacy role and that the views he states are personal, not a formal actuarial analysis or conclusion.
The Bigger Picture
The five scenarios above cover a range of situations—from reserve manipulation to software shortcuts to expert witness conflicts—but they share a common thread. In each case, the actuary faces a difficult choice.
The Code exists precisely because professional obligations are sometimes difficult to honor. The ABCD’s guidance function is a rare, if not unique, resource, serving as a standing reminder that the profession takes professionalism seriously—and that actuaries are expected to do so as well.
Actuaries who find themselves in uncertain territory are encouraged to submit a request for guidance and use the ABCD as a confidential, professional resource.
More Tales from the Dark Side
The Academy will host its popular ABCD webinar, Tales from the Dark Side, on Dec. 18, 2026. Speakers will present examples of ethical problems based on cases and requests for guidance that have been brought before the ABCD. For more information, visit actuary.org.
Actuarial Standards
The U.S. actuarial profession has established standards of conduct, qualification, and practice, which are housed, maintained, and promulgated by the Academy.
The Code of Professional Conduct identifies actuaries’ ethical responsibilities to the public, to clients and employers, and to the actuarial profession.
The U.S. Qualification Standards specify requirements for basic education, experience, and continuing education that must be met by actuaries issuing statements of actuarial opinion (SAOs).
Actuarial Standards of Practice (ASOPs) provide a framework for performing professional assignments and offer guidance on recommended practices, documentation, and disclosure.
The actuarial profession’s three sets of standards don’t operate in isolation—they work together to uphold professionalism. That relationship is reflected in the Code, whose stated purpose is “to require actuaries to adhere to the high standards of conduct, practice, and qualifications of the actuarial profession, thereby supporting the actuarial profession in fulfilling its responsibility to the public.” The Code also requires actuaries to comply with applicable standards of practice and qualification standards. The ABCD request for guidance process helps actuaries stay on the right side of these standards.
Requests for Guidance
Actuaries can request confidential guidance from the ABCD when they:
- Need guidance on an actuarial matter that may affect their obligations under the Code of Professional Conduct.
- Seek confidential advice from an individual ABCD member on appropriate professional practice.
Send your request to [email protected].