Course on
Professionalism
ASOP - Introduction
Outline
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Perspectives on Professions
History of Standards
Standards of Practice
2
Perspectives on Professions
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Essential Characteristic of a Profession
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Expertise in area where professional services are
performed
Requirements
Setting selective standards for admission
 Training for the attainment of professional
competence
 An organization to test such competence
 Standards of conduct and practice
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3
Why Professions Exist
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One person can’t know everything
Need to spend years acquiring expertise in a given
field
Society must rely on professionals
Since only experts in field understand the
profession, professions must self-regulate
Need to establish standards of practice and conduct
in order to ensure that work products produced by
different professionals are of a similarly high quality
4
History of Standards
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1954: SOA update of Guides to Professional
Conduct (covered only general principles &
precepts)
1956: Conference of Actuaries in Public
Practice: Code of Professional Conduct
5
History of Standards
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1965: AAA formed; issued its own “Code”:
 Professional Duty
 Member’s responsibility to his/her principal
 Relationship with principal
 Impartiality & independence
 Advertising, publicity, & relations with other members
 Remuneration
 Use of titles
 Little direction in “standards of practice”
6
History of Standards
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1970’s: “Standards” start to be developed in response
to guides/laws issued by AICPA, NAIC, Federal
Government, et al.
Late 70’s: Emergence of the “Valuation Actuary”
1985: Interim Actuarial Standards Board (IASB)
formed
1988: ASB formed; given sole discretion to promulgate
actuarial standards of practice
 Charge: develop, promulgate standards; continually
review them for update needs
7
Standards of Practice
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Standards of professional performance and behavior
Developed to meet the expectations of users of the
professional services
Provide guidance for:
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Dealing with commonly encountered problems
Handling new problems & non-routine situations
Ensure the high quality of professional services
8
Role of ASB
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Actuarial Standards Board (ASB) responsible for
promulgating ASOPs
ASB has exclusive authority to determine ASOP
needs and content
All actuaries required to observe ASOPs
9
Purpose of ASOPs
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Provide actuaries with framework for
performing actuarial assignments
ASOPs are principles-based – do not dictate
every step of a project
ASOPs do not mandate a single approach, but
rather provide guidance
Emphasize process over outcome – actuaries
can reasonably disagree
10
Practice Areas
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Five “Areas of Practice” within ASB, each with its own
operating sub-committee, charged with developing &
reviewing appropriate ASOP’s:
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Casualty
Health
Life
Pension
General
11
Format of Standards
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Preamble
Purpose, scope, effective date of Standard
 Definitions of special terms
 Background & historical issues
 Review of current & alternate practices
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Analysis of Issues & Recommended Practices
Communications & Disclosures
12
Question #1
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Which entity has discretion to promulgate
actuarial standards of practice?
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A. CAS
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B. ASB
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C. AAA
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D. ABCD
Answer #1
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The correct answer is B:
CONGRATULATIONS
You have successfully completed this session
on the Introduction to the ASOPs