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The Actuary The magazine of the Institute & Faculty of Actuaries

Equitable Life

I wonder if Equitable Life’s counsel, the lower court judges, and the dissenting Law Lord in the Equitable case find themselves in professional disgrace for not having foreseen the majority Law Lords’ decision? Are they facing expulsion from their profession? And if not, is it because it is perfectly understandable that they could not have foreseen it, despite a lifetime of legal expertise?

Actuaries do make some claim to predict the future, but we do not claim to predict it in the sense that a tarot card reader claims to predict it. If nobody in the legal profession could claim to predict the Law Lords’ eventual decision, nobody in the actuarial profession can claim to have any skills to do so either. And if that decision is sufficiently significant to undermine the viability of a life assurance company, then the possibility of such decisions represent a new risk factor for all financial institutions. Unfortunately, a myth seems to have developed that such an event could only happen in the insurance industry – but any bank would be equally vulnerable to such a sweeping decision.