Independence, Conflict of Interest and the Actuarial Profession

Abstract

The actuarial profession has a long history of providing critical expertise to society. The services delivered are some of the most complex and mysterious to outsiders of all professions but little has been written about the professional responsibilities of actuaries in the academic literature beyond that of the profession itself. This paper makes the case that the issues surrounding professional independence of actuaries are, in principle, similar to those that faced the audit profession before the scandals and resultant regulatory changes early this century. It is argued that, despite the position taken by the actuarial profession and management, the status quo raises genuine concerns about conflicts of interest and independence and that the risks that arise are of sufficient magnitude that they should at least be the subject of a full debate.

Measurement of Organisation-Professional Conflict in the industrial psychology profession

“…From the findings in this study it seems that power dynamics in bureaucratic and authoritative organisational cultures may be associated with the experience of OPC (Gamage, 2006;Harries-Jenkins, 1970;Shafer et al, 2002). Strategic misalignment of professional and organisational values and goals may further exacerbate the occurrence of the phenomenon (Bowen et al, 2007;Gunz et al, 2009). In addition, it seems that a lack of professional independence and limited involvement, in key decisions relating to the respective professionals' areas of expertise, may often necessitate that professionals compromise their professionalism (Banks, 2006;Brandsen, 2009;Gunz & Gunz, 2008).…”

Actuaries, Conflicts of Interest and Professional Independence: The Case of James Hardie Industries Limited

“…Here, a case study of the actuary providing professional services is explored from the perspective of whether the profession faces more fundamental pressures which it may or may not be able to withstand when it expands its services to consulting. In this way, this article extends the study of Gunz et al (2009) by studying the issues they raised in an applied context and one where the conduct of the actuary demonstrates the inherent conflicts of interest between employment relationships and the 'public interest'.…”

“…The concern here is for its ethical responsibilities and, specifically, the extent to which the public can have trust in the integrity with which actuaries practice their profession. A case has been made elsewhere that the actuarial profession, in certain contexts, faces inevitable and potentially troubling conflicts of interest within the context of valuing-defined benefit pension plans (Gunz et al, 2009). Here, a case study of the actuary providing professional services is explored from the perspective of whether the profession faces more fundamental pressures which it may or may not be able to withstand when it expands its services to consulting.…”

“…Sally Gunz and Sandra van der Laan doing so, we highlight what Gunz et al (2009) discussed from a theoretical perspective: both the shortcomings of a rule-based approach to achieving professional integrity and the manner in which institutional structures, here the employment relationship, have the potential to corrupt or subvert professional ethical conduct.…”

“…4 In this respect, the actuarial profession is no different. Gunz et al (2009) considered the actuarial profession in the North American context. There is, however, considerable commonality in fundamental principles and governance across jurisdictions, largely for historic reasons.…”