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The Actuary The magazine of the Institute & Faculty of Actuaries

Whose position?

For once, the profession is prominent in the press and immediately all hell breaks loose. Widespread outcry, angry phone calls to the Institute, calls for heads to roll – what actually happened and what lessons can be learned?What happened is that FIMC (the inner council of the Joint Council) has been getting hot under the collar of late regarding ‘matters of public interest’. One such matter has been commission payments to independent intermediaries in respect of general insurance products. As a result it recommended to the General Insurance Standards Council (GISC) that volume-related commissions be outlawed and that the level and form of remuneration to such intermediaries be disclosed to policyholders.There the matter might have lain had not various industry journalists been briefed at a meeting at the Institute on the profession’s stance on several general insurance matters, including commission, and had not Post Magazine then given prominence to the news. Not surprisingly, the various bodies of intermediaries regard the profession’s views as unhelpful and have left their actuarial contacts in no doubt about their displeasure.There are, to my mind, three issues here: u Should we have a view? The profession has taken upon itself a public interest role. It seeks to add informed comment to the debate on public interest issues. Mis-selling and bad advice are clearly matters of public interest and many people, not just senior actuaries, see undisclosed commission arrangements between insurers and independent intermediaries as prejudicing the latter’s independence. Therefore, on this matter the profession has a duty to comment. u Is the comment that it has actually made the right one? This is an issue which I shall duck. It suffices to say that last year I chaired a working party which, among other things, covered this issue and came to a different conclusion. u How does the profession reach such a view – and, indeed, is there a better process that could be employed? The choice of public interest issues is, in general, left to the practice boards. The boards then form a view – effectively a position statement. The position statement is then scrutinised by FIMC and, if approved, made available for distribution. In this case, the form of the position statement was a submission to the GISC with a subsequent press briefing to disseminate the profession’s views to a wider audience.So that’s the process. But is it the best way of establishing the profession’s views? The range of topics on which position statements could be produced is vast. The ultimate choice of topics is something of a political act: the position is established by a small subset of the membership. Are those pronouncing on these matters all qualified to do so? How have the views of the wider membership been taken into account? And what, ultimately, is the accountability of those who set the profession’s public opinions? In the case of members of Council they are accountable to their fellow fellows and can be rejected if and when they subsequently apply for re-election. But, at a time when their personal views are taking an increasing role in shaping the public views and future direction of the profession, what does most of the electorate know about these views? Absolutely nothing, at least not until the emergence of more position statements!This leads me to two conclusions: u There should be electoral reform. Knowing the bibliography and dining club membership of potential Council members is no longer enough. Without information about the attitudes, opinions, and plans of candidates the membership is disenfranchised. The electorate needs to see candidates’ manifestos and indeed should be able to challenge them in debate. I foresee hustings. u Council needs to hear more of the opinions of rank and file actuaries. Unless they express more volubly their views on public interest issues – starting with what those issues are – then the public utterances of the profession can only reflect the personal views of members of Council. The pronouncements emanating from the Faculty and the Institute shape public perception of actuaries. As actuaries, you must speak up on all public interest issues to make sure that the profession – your profession – is one that you can continue to be proud of.