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Actuarial Ethics Essay

7978 words - 32 pages

Essay

Ethics is a social science that refers to the study of human conduct and moral principles. The role of ethics and moral judgement is increasingly playing a more significant role in the corporate world. The concepts of personal values and moral judgement are inextricably connected. As a result, I believe that as professionals, whether we choose to act according to our morally intelligent conclusion, or ignore it, is highly related to individuals underlying personal values.

When professionals are required into making moral decisions, they are forced to rely on their ethical reasoning. However Maggid’s web article argues that, Modern Actuary ethics goes further than the ‘minimal ...view middle of the document...

It is clear that there is a direct relationship between values and ethical rationale; consequently underlying personal values determine whether we act morally intelligent.

As actuaries, we will be forced into positions of large responsibility, we will be required to advise and make critical business decisions based on mathematical and historical evidence or by specific company rules and regulation. As a result, exercising ethical decisions are particularly important for an actuary. Many financial institutions rely on actuarial mathematical models and actuarial rationale, more specifically; an insurance company’s profit levels are dependent on the actuarial team’s policy reserve model. Thus there may be significant pressure by the board of directors to manipulate the structure of its policy reserve model, so that it can maximise its profits on paper. However, an actuary’s manipulation of the reserve levels could consequently increase the level of risk exposure, as the inaccurate policy reserve levels could potentially distort how much claim cover the company actually has. In this situation an actuary must be able to feed off it’s underlying personal values and block out the external environment and the pressures of the CEO board. Without personal values, even the smartest actuary would succumb to the external pressures of the corporate environment. This in turn could put financial institutions at risk, and when major institutions are at risk, it will have an impact on the whole of society. In contrast an individual with values would be able to adhere to professional standards and requirements and not be pressured by the people on top.

Through my reflection of the articles, “Must ‘Nice guy’ always finish last?” (Mcdonald 1995) and “New Actuarial Ethics” (Miggid 2010), I have learnt that the role of ethics is an essential part of being a professional actuary. The personal values that drive us will always play a critical role in acting morally intelligent. In addition, Mcdonald’s article has reiterated that the external corporate environment will always be trying to influence your decisions. Nonetheless these articles have encouraged me to continually integrate my personal values and technical knowledge so that I can replicate morally right decisions no matter what the situation.

Bibliography

Mcdonald, M, 1995, “Must ‘Nice Guys’ Always Finish Last? The case for professional ethics”
Record of Society of Actuaries, Vol. 21, No 3A

Miggid, O, 2010, “New Actuarial Ethics”
< http://actuary-info.blogspot.com/2010/04/new-actuarial-ethics.html>

Technical Component

3.2.1

Projected nominal Salaries p.a.

year Age1 s_sem1 Age2 s_sem2
2011 24 0.00 25 83261.58
2012 25 84926.81 26 89724.08
2013 26 91518.56 27 96569.53
2014 27 98500.92 28 103829.70
2015 28 105906.29 29 111511.70
2016 29 113741.93 30 119651.15
2017 30 122044.18...

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