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Jay Jaffe, President Actuarial Enterprises, Ltd. Chicago, IL 60610 312-397-0099 jay@actentltd

MAY 14, 2019 HARTFORD-SPRINGFIELD ACTUARIAL CLUB MEETING HARTFORD, CT PROFESSIONALISM MAINLY BASICS. Jay Jaffe, President Actuarial Enterprises, Ltd. Chicago, IL 60610 312-397-0099 jay@actentltd.com. SOCIETY OF ACTUARIES Antitrust Compliance Guidelines.

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Jay Jaffe, President Actuarial Enterprises, Ltd. Chicago, IL 60610 312-397-0099 jay@actentltd

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  1. MAY 14, 2019HARTFORD-SPRINGFIELD ACTUARIAL CLUB MEETINGHARTFORD, CTPROFESSIONALISMMAINLY BASICS Jay Jaffe, President Actuarial Enterprises, Ltd. Chicago, IL 60610 312-397-0099 jay@actentltd.com H-S Actuarial Club 5-14-19

  2. SOCIETY OF ACTUARIESAntitrust Compliance Guidelines • Active participation in the Society of Actuaries is an important aspect of membership. While the positive contributions of professional societies and associations are well-recognized and encouraged, association activities are vulnerable to close antitrust scrutiny. By their very nature, associations bring together industry competitors and other market participants. • The United States antitrust laws aim to protect consumers by preserving the free economy and prohibiting anti-competitive business practices; they promote competition. There are both state and federal antitrust laws, although state antitrust laws closely follow federal law. The Sherman Act, is the primary U.S. antitrust law pertaining to association activities. The Sherman Act prohibits every contract, combination or conspiracy that places an unreasonable restraint on trade. There are, however, some activities that are illegal under all circumstances, such as price fixing, market allocation and collusive bidding. • There is no safe harbor under the antitrust law for professional association activities. Therefore, association meeting participants should refrain from discussing any activity that could potentially be construed as having an anti-competitive effect. Discussions relating to product or service pricing, market allocations, membership restrictions, product standardization or other conditions on trade could arguably be perceived as a restraint on trade and may expose the SOA and its members to antitrust enforcement procedures. • While participating in all SOA in person meetings, webinars, teleconferences or side discussions, you should avoid discussing competitively sensitive information with competitors and follow these guidelines: • Do not discuss prices for services or products or anything else that might affect prices • Do not discuss what you or other entities plan to do in a particular geographic or product markets or with particular customers. • Do not speak on behalf of the SOA or any of its committees unless specifically authorized to do so. • Do leave a meeting where any anticompetitive pricing or market allocation discussion occurs. • Do alert SOA staff and/or legal counsel to any concerning discussions • Do consult with legal counsel before raising any matter or making a statement that may involve competitively sensitive information. • Adherence to these guidelines involves not only avoidance of antitrust violations, but avoidance of behavior which might be so construed. These guidelines only provide an overview of prohibited activities. SOA legal counsel reviews meeting agenda and materials as deemed appropriate and any discussion that departs from the formal agenda should be scrutinized carefully. Antitrust compliance is everyone’s responsibility; however, please seek legal counsel if you have any questions or concerns. H-S Actuarial Club 5-14-19

  3. Presentation Disclaimer Presentations are intended for educational purposes only and do not replace independent professional judgment.  Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Society of Actuaries, its cosponsors or its committees.  The Society of Actuaries does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.  Attendees should note that the sessions are audio-recorded and may be published in various media, including print, audio and video formats without further notice. H-S Actuarial Club 5-14-19

  4. HOW I PREPARED FOR TODAY • Personal experiences • Open source research (Googling) • Recollections from books I have read • Feedback from other presentations • Etc. H-S Actuarial Club 5-14-19

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  6. SESSION GENERAL GOALS • PARTICIPATE in important professional discussions • Expand your concept of professionalism • Gain insight into how non-actuary professionals deal with certain professionalism issues • Potential feedback to SOA about professionalism • Help meet professionalism CE requirement • Make professionalism a fun experience rather than a dreadful requirement H-S Actuarial Club 5-14-19

  7. THIS SESSION’S AGENDA • The meaning of: • Professional • Profession • Professionalism • Ethics • Email professionalism • Inflection points • Q&A H-S Actuarial Club 5-14-19

  8. WHY START WITH THIS SESSION WITH A DISCUSSION OFTHE 3 P’S?PROFESSIONAL, PROFESSION AND PROFESSIONALISM?Answer: to establish a common knowledge base H-S Actuarial Club 5-14-19

  9. PROFESSIONAL • An adjective: a PROFESSIONAL athlete (as opposed to an amateur) • A noun: • A person engaged or qualified in a profession (such a lawyer, doctor, etc.) • A person competent or skilled in a particular activity (such as an actor) H-S Actuarial Club 5-14-19

  10. PROFESSIONAL Someone who follows the principles of his or her profession H-S Actuarial Club 5-14-19

  11. ATTRIBUTES OF A PROFESSIONAL • Objectivity • Respect • Honesty • Competence • Honor commitments • Project positive image H-S Actuarial Club 5-14-19

  12. THE POINT IS THAT BEING A PROFESSIONAL (E.G., AN ACTUARY) IS MORE THAN JUST KNOWING THE RULES AND TOOLS (E.G., ASOP’S OR HOW TO DO A CALCULATION) H-S Actuarial Club 5-14-19

  13. THE MEANING OF A PROFESSION Chris Daykin “Professionalism and Trust” H-S Actuarial Club 5-14-19

  14. ELEMENTS OF A PROFESSION • A skilled intellectual technique • A voluntary association bound by a code of conduct • A formalized mode of enforcing the code of conduct upon the membership H-S Actuarial Club 5-14-19

  15. 10 DISTINGUISHING FEATURES OF A PROFESSION • Advanced educational requirements • Accreditation of the educational standard by a professional body • Requiring work experience in a professional context • Professional code of conduct • Written standards of practice H-S Actuarial Club 5-14-19

  16. 10 DISTINGUISHING FEATURES OF A PROFESSION 6. Collective responsibility for maintenance of competence and standards 7. Requirement to remain in good standing 8. Continuing professional development requirements 9. A comprehensive discipline process 10. The possibility of a common voice to participate in public debate H-S Actuarial Club 5-14-19

  17. THE BENEFITS TO THE PUBLIC OF PROFESSIONS • Quality assurance: • Education • CE and professional development • Professional norms and standards of practice • Degree of consistency in professional advice • Availability of the professional service • Fiduciary responsibility between professionals and their clients • 3rd parties being able to lay a complaint and seek redress H-S Actuarial Club 5-14-19

  18. THE 2 KEY QUESTIONS Are SOA, CAS, and AAA members: 1. Professionals? and/or 2. Members of a profession? H-S Actuarial Club 5-14-19

  19. ARE SOA, CAS, AAA MEMBERS • Professionals? • Members of a profession? YES H-S Actuarial Club 5-14-19

  20. WHAT IS PROFESSIONALISM? H-S Actuarial Club 5-14-19

  21. WHAT IS PROFESSIONALISM? The competence or skill expected of a professional. H-S Actuarial Club 5-14-19

  22. YOUR 2 AUDIENCES Outsiders Peers H-S Actuarial Club 5-14-19

  23. YOUR 2 AUDIENCES Outsiders Peers H-S Actuarial Club 5-14-19

  24. 2 QUESTIONS REGARDING PROFESSIONALISM • What do outsiders (i.e., non-peers) expect from a professional? • What do peers expect from a professional? H-S Actuarial Club 5-14-19

  25. WHAT DOOUTSIDERS EXPECT FROM A PROFESSIONAL? • Appearance • Demeanor • Reliability • Competence • Ethics • Poise • Communication etiquette • Accountability H-S Actuarial Club 5-14-19

  26. WHAT DO PEERS EXPECT FROM A PROFESSIONAL? • Professional integrity • Qualifications • Standards of Practice • Communication and Disclosure • Conflict of Interest rules • Control of Work Product • Confidentiality • Courtesy and Cooperation • Follow Advertising rules • Deal with Violations of Code of Professional Conduct H-S Actuarial Club 5-14-19

  27. A PROFESSIONAL’S FIDUCIARY RELATIONSHIP • Mutual trust between client and professional • No material info withheld by client • Client trusts professional because of education and membership in a professional body • Tailoring advice to client’s needs and in accordance with professional standards • Remuneration is fee based and all other relevant interests are disclosed H-S Actuarial Club 5-14-19

  28. PROFESSIONALISM AND CE: UNDERLYING REASONS • A necessity regardless of whether it is required • Prepares a professional for change and staying current • Includes reviewing materials --- has there been a change since the last time you read a document? • Stimulates innovation • A mechanism to establish personal contacts outside of your environment (international, other specialists, volunteer, etc.) and generate professional cross-fertilization H-S Actuarial Club 5-14-19

  29. PROFESSIONALISM AND CE: 3 PERSPECTIVES • Stick to narrow professional/actuarial topics • Take a broader perspective beyond the technical and actuarial specific topics: • Issues raised by other professions • Best practice concepts • General business concerns • The bare minimum CE standard is enough H-S Actuarial Club 5-14-19

  30. DISCUSSION TOPIC #1: CE • Should the actuarial profession require CE and, specifically, professionalism CE? • If CE were NO longer required, how would you maintain your actuarial and professionalism skills? • If CE continues to be required, what improvements to the present SOA system would you recommend? H-S Actuarial Club 5-14-19

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  32. ETHICS(Moral Philosophy) Ethics --- the branch of philosophy that involves systematizing, defending and recommending concepts of right and wrong conduct H-S Actuarial Club 5-14-19

  33. BUSINESS ETHICS A form of professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment H-S Actuarial Club 5-14-19

  34. REMINDER There is an Actuarial Code of Conduct H-S Actuarial Club 5-14-19

  35. ACTUARIAL CODE OF CONDUCT ETHICS RELATED TOPICS • Fulfilling responsibility to “the public”* (intro) • Laws take precedence over Code of Conduct (intro) • Acting with integrity and competence (P#1) • Uphold reputation of the actuarial profession* (P#1) • Disclosure of compensation (P#6) • No false or misleading advertising (P#11) * Responsibility and reputation not defined H-S Actuarial Club 5-14-19

  36. MAIN ETHICAL CONCERNS FACING ACTUARIAL PROFESSION* • Being pressured to select inappropriate assumptions used in pricing and reserving • Allowing false or misleading representation of products or service in marketing, advertising or sales efforts • Failure to take appropriate action when another actuary misrepresents information or you otherwise see that something has not been done correctly (aka “the snitch rule”) * “New Ethical Concerns Facing the Actuarial Profession,” AAA Council on Professionalism, 4/15 H-S Actuarial Club 5-14-19

  37. QUALIFYING PROFESSIONALISM ACTIVITIES: ETHICS* • Business ethics: • fiduciary responsibilities, • corporate governance, • discrimination, • intellectual property rights, • ethical standards around the world, • etc. *SOA Panel Discussion, June, 2010 (Session #22) H-S Actuarial Club 5-14-19

  38. AICPA ETHICS COURSE TOPICS • Recognizing ethical issues; • Exercising professional judgment; • Addressing differences with your employer; • Objectivity and independence standards; • Identifying conflicts of interests; • Gifts/entertainment from company vendors or customers; • Competence; • Due care; and • The ethical decision-making model. H-S Actuarial Club 5-14-19

  39. ETHICS: AICPA & SOA H-S Actuarial Club 5-14-19

  40. ETHICS IS AN OPEN ENDED TOPIC • Often tough to get a “black or white” answer • Other professions wrestle with ethics --- what can we learn from their efforts? • Probably an area that is faced by actuaries with more experience --- but less experienced actuaries must be conscious of the area! H-S Actuarial Club 5-14-19

  41. ETHICAL TOPICS YOU MAY ENCOUNTER • WHAT SHOULD I DO IF ….? • I work for a company and am confronted by: • A professional ethical problem? • A non-professional ethical problem? • I am a consulting actuary and am concerned about an ethical matter with a client? • I observe another actuary doing something ethically inappropriate? • I do something stupid? H-S Actuarial Club 5-14-19

  42. SUGGESTIONS FOR DEALING WITH ETHICAL PROBLEMS • Recognize that ethical problems are “part of the job” • Understand the consequences of unethical behavior • Consider the ethical standards of your employer, partners, etc. + those of your profession • Consult ABCD or other actuaries • Is there ever a “safe harbor”? • Ethics is part of your CE: • Important topic • Qualifies as part of your CE Professionalism hours • Avoid the problem in the first place H-S Actuarial Club 5-14-19

  43. DISCUSSION TOPIC #2: ETHICS • Do we need to teach and discuss ethics? • Is there a difference between “professional ethics” and “ethics”? If so, what is it? • Does the threat of “loss of license” cause professionals to act more ethically? • At what point should an actuary take action? • Reporting another actuary? • Resigning from a job or an assignment? • Is a “no harm/no foul safe harbor” attitude OK? H-S Actuarial Club 5-14-19

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  45. EMAIL (COMMUNICATION) PROFESSIONALISM H-S Actuarial Club 5-14-19

  46. EMAIL PROFESSIONALISM:16 REMINDERS* • Use a clear, direct subject line • Use a professional email address • Think twice before hitting “reply all” • Include a signature block • Use professional salutations • Use exclamation points sparingly • Be cautious with humor *Inc.com, 2/2/16 H-S Actuarial Club 5-14-19

  47. EMAIL PROFESSIONALISM:16 REMINDERS 8. Know that people from different cultures speak and write differently 9. Reply on a timely basis to all emails 10. Proofread/spellcheck every message 11. Add the recipient(s) email address last 12. Double-check the recipients 13. Use classic fonts 14. Monitor your language H-S Actuarial Club 5-14-19

  48. EMAIL PROFESSIONALISM: 16 REMINDERS 15. NO EMAILS, TWEETS, OR OTHER ELECTRONIC COMMUNICATIONS ARE CONFIDENTIAL! H-S Actuarial Club 5-14-19

  49. EMAIL PROFESSIONALSIM:16 REMINDERS 16.EMAILS ARE PERMANENT! H-S Actuarial Club 5-14-19

  50. OTHER EMAIL WARNINGS • Become familiar with and follow your employer’s email protocols • Keep your business and private communications on separate devices • Immediately notify unintended recipients • Respond to emails • Review ASOP #41 (Communications) which covers all communications such as emails but also verbal interchanges H-S Actuarial Club 5-14-19

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