ACSC 533 Lecture 32: ACSC 513 - David Scollnik - Winter 2018
20 Mar 2018
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Document Summary
Another regulatory-type role for actuaries involves ensuring that when financial institutions have discretions over terms and conditions, the individuals affected are fairly treated. Traditional with-profit life insurance policies promised to pay a fixed guaranteed benefit and in addition gace the policyholder a right to participate in the unknowable future profits. There was no set formula by which the insurance company would calculate how much profit to allocate to each policy. An efficient solution to the problem of resolving these incompletely specified contracts was to delegate the allocation of profits to a person whom both parties (the company and the policyholder) agreed was independent, expert and impartial. Actuaries working in employer-sponsored pension plans face a similar issue. The pension plan rules will set out the benefits payable in most circumstances. But in special cases where it is difficult to specify what would be appropriate, the actuary is given the responsibility of deciding what is equitable.
