1. An Introduction to the ABCD For the Casualty Actuarial Society Course on Professionalism Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

2. The ABCD was established in 1991 to provide a single body in the U.S. to: Investigate actuaries compliance with the code of Professional Conduct Counsel actuaries in good professional practice Mediate disputes between actuaries and others Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

3. ABCD Membership Appointed by Council of U.S. Presidents – CUSP Presidents and Presidents – elect of U.S. organizations 9 members total: A Chairperson Two Vice-Chairpersons 6 regular members Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

4. ABCD Processes Article X of the AAA bylaws ABCD Rules of Procedure Confidential, unless:  Actuary makes public or agrees to publication  Court requires disclosure Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

5. An ABCD Inquiry The ABCD investigates cases (except in Canada) involving members of: The American Academy of Actuaries The American Society of Pension Professionals and Actuaries The Casualty Actuarial Society The Conference of Consulting Actuaries The Society of Actuaries The Canadian Institute of Actuaries (in the U.S.) Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

6. An ABCD Inquiry Is a fact-finding effort, not adversarial Examines whether or not an actuary materially violated the Code of Professional Conduct Does not administer discipline, but may recommend a level of discipline to an actuary’s membership organizations Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

7. ABCD Inquiries in 2014 Type of Case Pending From 2013 and Earlier Received in 2014* Total Conduct 7 7 14 Practice 4 24 28 Conduct & Practice 1 4 5 Requests for Guidance 0 90 90 Total 12 125 137 Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

8. ABCD Inquiries in 2014 Practice Area Pending From 2013 and Earlier Received in 2014 Total Casualty 437 Health 112 Life 011 Pension 73037 Total 123547 Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

9. ABCD Inquiries in 2014 Action by Individual ABCD Members Replied to requests for guidance90 Disposition by Chairperson and Vice Chairpersons Dismissed19 Dismissed with Guidance 5 Disposition by Whole ABCD After Investigation Dismissed 5 Counseled 4 Recommended Suspension 4 Total Cases Closed (including Requests For Guidance)127 Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

10. Major Issue Alleged DisciplineCounselDismissTotal Precept 1: Failure to act with integrity 241117 Failure to perform services with competence 3115 Calculation or data errors 2 13 Other errors in work 3115 Failure to uphold reputation of Actuarial profession 3137 Precept 2: Performing work when not qualified 21710 Precept 3: Work fails to satisfy an ASOP 2 1416 Use of unreasonable assumptions 1 23 Precept 4: Inadequate actuarial communication 1 89 Precept 5: Failure to identify Principal Precept 6: Failure to disclose Precept 7: Conflict of Interest Precept 8: Failure to take reasonable steps to prevent misuse of work product Precept 9: Disclosure of confidential information Precept 10: Failure to cooperate with other actuary 44 Precept 11: Improper advertising Precept 12: Improper use of designation 2 2 Precept 13: Failure to report violation Precept 14: Failure to cooperate with the ABCD Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

11. Step 1: Initiation of Inquiry  Complaint received  Reviewed by staff for completeness  Information based  Chairs review public document and decide to proceed  Sent to Subject Actuary (SA) for response Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

12. Step 2: Chairs’ review  Chairs evaluate complaint and response for possible material violation  Chairs decide whether to:  Seek additional information  Dismiss the complaint  Refer the case for mediation  Commence investigation Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

13. ABCD Inquiry Process Step 3: Notification  Notify Subject Actuary and complainant, if any, of Chairs decision  Notify ABCD at next meeting Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

14. ABCD Inquiry Process Step 4: Investigation  Appoint investigator, subject to challenge by the Subject Actuary  Investigator  Obtains and reviews documents  Interviews individuals involved  Prepares report of results, i.e. facts as investigator understands them  Does not offer opinions or conclusions  Report sent to SA for response Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

15. ABCD Inquiry Process Step 5: ABCD consideration  All documents sent to ABCD members  Case discussed at ABCD meeting  ABCD decides whether to  Seek additional information  Dismiss (with / without guidance)  Counsel the Subject Actuary  Conduct a hearing Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

16. ABCD Inquiry Process Step 6: Notification  Notify Subject Actuary, complainant, and investigator of decision  Schedule hearing if so decided Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

17. ABCD Inquiry Process Step 7: Hearing (NOT A TRIAL!!!)  Conduct fact finding hearing attended by  Investigator  Subject Actuary (SA may also have attorney present)  Witnesses  Hearing is recorded by a court reporter  Investigator presents results  ABCD and SA question investigator  Subject Actuary presents case  ABCD questions Subject Actuary Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

18. ABCD Inquiry Process Step 8: Deliberations  ABCD discusses hearing and documents  Decides whether to  Dismiss  Counsel  Recommend discipline  Private Reprimand  Public Reprimand  Suspension  Expulsion  Obtain more information, reopen hearing

19. ABCD Inquiry Process Step 9: Notification  Notify Subject Actuary and complainant, and investigator of decision  If discipline is recommended, transmit to appropriate organization(s)  Statement of ABCD findings  All documents used by ABCD  Transcript of hearing Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

20. Joint Discipline Process Step 10: Joint Discipline Council (JDC)  If discipline is recommended by ABCD, member organization(s) will refer matter to the JDC  JDC is composed of the Presidents and Presidents-Elect of the five U.S.-based actuarial organizations  As needed, the JDC will form Disciplinary and Appeals Panels consisting of at least five members selected from the JDC Pool  JDC Pool is a group appointed by the member organizations in accordance with the Agreement on Joint Discipline Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

21. Joint Discipline Process Step 10: Joint Discipline Council (JDC)  JDC Panels will conduct proceedings according to the JDC Rules of Procedure for Disciplinary Actions  Decision by JDC Panel to suspend for more than two years or expel will be referred to the organization(s) of which the Subject Actuary is a member for a final disciplinary decision in accordance with organization(s) own procedures Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

22. Request for Guidance Private Guidance by ABCD member  Expresses member’s own opinion Private guidance by the ABCD  Expresses views of the board Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

23. Request for Guidance Example of RFG Topics  How do I know if I’m qualified?  How can I become qualified?  How can I do a job that involves more than one area of expertise?  How much can I rely on my staff?  How much documentation of my work should I save? What if I leave my company?  When should I refuse an assignment?  When should I make a complaint about another actuary?  When is a violation of the Code material?  When is a violation of the Code Resolved? Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

24. Request for Guidance Actuaries can request confidential guidance by:  Contacting the ABCD office by phone or e-mail and requesting assistance  Telephone: 202-223-8196  Website: www.abcdboard.orgwww.abcdboard.org  Contacting any ABCD member by phone or e-mail  www.abcdboard.org www.abcdboard.org  Writing a letter to the ABCD office.  1850 M St., Suite 300, Washington, D.C. 20036 Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

25. Mediation If all parties agree Facilitate resolution of issue without inquiry Copyright © 2015 American of Academy of Actuaries. All Rights Reserved. May not be reproduced without expressed permission.

26. QUESTIONS? Contact Brian Jackson at 202-223-8196 Jackson@Actuary.org