Code of Professional Conduct
The purpose of this Code of Professional Conduct
(“Code”) 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.
An Actuary shall comply with the Code. An Actuary
who commits a material violation of the provisions of
the Code shall be subject to the profession’s counseling
and discipline procedures.
The Precepts of the Code identify the professional
and ethical standards with which an Actuary must comply
in order to fulfill the Actuary’s responsibility to the
public and to the actuarial profession. The Annotations
provide additional explanatory, educational, and advisory
material on how the Precepts are to be interpreted
and applied.
In addition to this Code, an Actuary is subject to applicable rules of professional conduct or ethical standards that have been promulgated by a Recognized Actuarial Organization for the jurisdictions in which the
Actuary renders Actuarial Services. Actuarial Services
are considered to be rendered in the jurisdictions in
which the Actuary intends them to be used unless specified otherwise by an agreement between a Recognized Actuarial Organization for any such jurisdiction and the organizations that have adopted the Code. Laws may also impose obligations upon an Actuary.
Where requirements of Law conflict with the Code, the
requirements of Law shall take precedence.
An Actuary must be familiar with, and keep current
with, not only the Code, but also applicable Law and
rules of professional conduct for the jurisdictions in
which the Actuary renders Actuarial Services. An Actuary
is responsible for securing translations of such Laws
or rules of conduct as may be necessary.
Definitions
As used throughout the Code, the following terms are
capitalized and have the meanings indicated:
® Actuarial Communication: A written, electronic,
or oral communication issued by an Actuary with respect
to Actuarial Services.
® Actuarial Services: Professional Services provided
to a Principal by an individual acting in the capacity
of an actuary. Such services include the rendering of
advice, recommendations, findings, or opinions based
upon actuarial considerations.
® Actuary: An individual who has been admitted to a
class of membership to which the Code applies by action
of any organization having adopted the Code. When the
term “actuary” is used without being capitalized, it refers to any individual practicing as an actuary, regardless of organizational membership or classification.
® Confidential Information: Information not in the
public domain of which an Actuary becomes aware as
a result of providing Actuarial Services to a Principal. It
includes information of a proprietary nature and information that is legally restricted from circulation.
® Law: Statutes, regulations, judicial decisions, and
other statements having legally binding authority.
® Principal: A client or employer of the Actuary.
® Recognized Actuarial Organization: An organization
that has been accepted for full membership in the
International Actuarial Association or a standards-setAmerican Academy of Actuaries www.actuary.org Yearbook and Leadership manual 2009 70ting, counseling, or discipline body to which authority
has been delegated by such an organization.
Professional Integrity
PRECEPT 1. An Actuary shall act honestly, with integrity
and competence, and in a manner to fulfill the profession’s responsibility to the public and to uphold the reputation of the actuarial profession.
ANNOT ATION 1-1. An Actuary shall perform Actuarial
Services with skill and care.
ANNOT ATION 1-2. An Actuary shall not provide Actuarial
Services for any Principal if the Actuary has reason to believe that such services may be used to
violate or evade the Law or in a manner that would be detrimental to the reputation of the actuarial profession.
ANNOT ATION 1-3. An Actuary shall not use a relationship with a third party or with a present or prospective Principal to attempt to obtain illegal or materially improper treatment from one such party on
behalf of the other party.
ANNOT ATION 1-4. An Actuary shall not engage in
any professional conduct involving dishonesty, fraud,
deceit, or misrepresentation or commit any act that
reflects adversely on the actuarial profession.
Qualification Standards
PRECEPT 2. An Actuary shall perform Actuarial Services
only when the Actuary is qualified to do so on the
basis of basic and continuing education and experience,
and only when the Actuary satisfies applicable qualification standards.
ANNOT ATION 2-1. It is the professional responsibility
of an Actuary to observe applicable qualification
standards that have been promulgated by a Recognized
Actuarial Organization for the jurisdictions in which the Actuary renders Actuarial Services and to keep current regarding changes in these standards.
ANNOT ATION 2-2. The absence of applicable qualification standards for a particular type of assignmentor for the jurisdictions in which an Actuary renders
Actuarial Services does not relieve the Actuary of
the responsibility to perform such Actuarial Services
only when qualified to do so in accordance with this
Precept.
Standards of Practice
PRECEPT 3. An Actuary shall ensure that Actuarial Services performed by or under the direction of the Actuary satisfy applicable standards of practice.
ANNOT ATION 3-1. It is the professional responsibility
of an Actuary to observe applicable standards of
practice that have been promulgated by a Recognized
Actuarial Organization for the jurisdictions in which
the Actuary renders Actuarial Services, and to keep
current regarding changes in these standards.
ANNOT ATION 3-2. Where a question arises with regard
to the applicability of a standard of practice, or
where no applicable standard exists, an Actuary shall
utilize professional judgment, taking into account
generally accepted actuarial principles and practices.
ANNOT ATION 3-3. When an Actuary uses procedures
that depart materially from those set forth in
an applicable standard of practice, the Actuary must
be prepared to justify the use of such procedures.
Communications and Disclosure
PRECEPT 4. An Actuary who issues an Actuarial Communication shall take appropriate steps to ensure that the Actuarial Communication is clear and appropriate to the circumstances and its intended audience, and satisfies applicable standards of practice.
ANNOT ATION 4-1. An Actuary who issues an Actuarial
Communication shall ensure that the Actuarial
Communication clearly identifies the Actuary as being
responsible for it.
ANNOT ATION 4-2. An Actuary who issues an Actuarial
Communication should indicate the extent to
which the Actuary or other sources are available to
provide supplementary information and explanation.
PRECEPT 5. An Actuary who issues an Actuarial
Communication shall, as appropriate, identify the
Principal(s) for whom the Actuarial Communication is
issued and describe the capacity in which the Actuary
serves.
PRECEPT 6. An Actuary shall make appropriate and
timely disclosure to a present or prospective Principal
of the sources of all direct and indirect material compensation that the Actuary or the Actuary’s firm has reAmerican Academy of Actuaries www.actuary.org Yearbook and Leadership manual 2009 71 ceived, or may receive, from another party in relation to an assignment for which the Actuary has provided, or will provide, Actuarial Services for that Principal. The disclosure of sources of material compensation that the Actuary’s firm has received, or may receive, is limited to those sources known to, or reasonably ascertainable by,the Actuary.
ANNOT ATION 6-1. An Actuary who is not financially
and organizationally independent concerning any
matter related to the performance of Actuarial Services
should disclose to the Principal any pertinent
relationship that is not apparent.
ANNOT ATION 6-2. An Actuary employed by a firm
that operates in multiple locations is subject to the
requirement of disclosure of sources of compensation
that the Actuary’s firm may receive in relation
to Actuarial Services with respect to a specific assignment for that Principal, regardless of the location in which such compensation is received.
Conflict of Interest
PRECEPT 7. An Actuary shall not knowingly perform
Actuarial Services involving an actual or potential conflict of interest unless:
a the Actuary’s ability to act fairly is unimpaired;
b there has been disclosure of the conflict to all present and known prospective Principals whose interests would be affected by the conflict; and
c all such Principals have expressly agreed to the performance of the Actuarial Services by the Actuary.
Control of Work Product
PRECEPT 8. An Actuary who performs Actuarial Services
shall take reasonable steps to ensure that such services
are not used to mislead other parties.
ANNOT ATION 8-1. An Actuarial Communication
prepared by an Actuary may be used by another party
in a way that may influence the actions of a third
party. The Actuary should recognize the risks of misquotation, misinterpretation, or other misuse of the
Actuarial Communication and should therefore take
reasonable steps to present the Actuarial Communication
clearly and fairly and to include, as appropriate, limitations on the distribution and utilization of the Actuarial Communication.
Confidentiality
PRECEPT 9. An Actuary shall not disclose to another
party any Confidential Information unless authorized
to do so by the Principal or required to do so by Law.
Courtesy and Cooperation
PRECEPT 10. An Actuary shall perform Actuarial Services
with courtesy and professional respect and shall
cooperate with others in the Principal’s interest.
ANNOT ATION 10-1. Differences of opinion among
actuaries may arise, particularly in choices of assumptions and methods. Discussions of such differences between an Actuary and another actuary, or in observations made by an Actuary to a Principal on
the work of another actuary, should be conducted
objectively and with courtesy and respect.
ANNOT ATION 10-2. A Principal has an indisputable
right to choose a professional advisor. An Actuary
may provide service to any Principal who requests
it, even though such Principal is being or has been
served by another actuary in the same matter.
ANNOT ATION 10-3. An Actuary in the course of an
engagement or employment may encounter a situation
such that the best interest of the Principal would
be served by the Actuary’s setting out an alternative
opinion to one expressed by another actuary, together
with an explanation of the factors that lend support
to the alternative opinion. Nothing in the Code
should be construed as preventing the Actuary from
expressing such an alternative opinion to the Principal.
ANNOT ATION 10-4. An Actuary may be requested to
advise a Principal for whom the Actuary knows or has
reasonable grounds to believe that another actuary
has provided, or is providing, Actuarial Services with
respect to the same matter. In such event, the Actuary
may choose to consult with such other actuary
both to prepare adequately for the assignment and to
make an informed judgment as to whether there are
circumstances involving a potential violation of the
Code that might affect acceptance of the assignment.
The Actuary should request the Principal’s consent
prior to such consultation.
ANNOT ATION 10-5. When a Principal has given
consent for a new or additional actuary to consult
American Academy of Actuaries www.actuary.org Yearbook and Leadership manual 2009 72
