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Expert Testimony by Actuaries (Part 2 of 4)

Expert Testimony by Actuaries (part 2)




Section 1. Purpose, Scope, Cross References, and Effective Date

1.1Purpose—This actuarial standard of practice (ASOP) provides guidance to actuaries providing expert testimony.

1.2Scope--This standard applies to actuaries when they testify as actuarial experts at trial, in hearing or arbitration, in deposition, or by declaration or affidavit. This standard does not apply to actuaries providing litigation support other than the expert testimony itself. However, actuaries providing such litigation support may consider the guidance in this standard to the extent that it is applicable and appropriate.

This standard supplements the Code of Professional Conduct and is intended to provide specific guidance with respect to expert testimony. Reference should also be made to other actuarial standards of practice concerned with the actuarial substance of the assignment.

Nothing in this standard is intended to discourage reasonable differences of actuarial opinion, or to inhibit responsible creativity in advancing the practice of actuarial science. Further, this standard is not intended to restrain unreasonably the selection of actuarial assumptions or methods, the communication of actuarial opinions, or the relationship between the actuary and a principal. Nothing in this standard is intended to prevent the actuary from challenging the application or a particular interpretation of existing precedent, law, or regulation where such application or interpretation would, in the opinion of the actuary, be inconsistent with otherwise appropriate actuarial practice.

To the extent that the guidance in this standard may conflict with the guidance in other ASOPs, the actuary should use professional judgment in reconciling such conflict. If a conflict exists between this standard and applicable law or regulation, compliance with applicable law or regulation is not considered to be a deviation from this standard.

1.3 Cross References—When this standard refers to the provisions of other documents, the reference includes the referenced documents as they may be amended or restated in the future, and any successor to them, by whatever name called. If any amended or restated document differs materially from the originally referenced document, the actuary should consider the guidance in this standard to the extent it is applicable and appropriate.

1.4 Effective Date—This standard is effective for all expert testimony provided on or after July 15, 2002.

Section 2. Definitions

The terms below are defined for use in this actuarial standard of practice.

2.1 Actuarial Assumption—The value of a parameter or other actuarial choice having an impact on an estimate of a future cost or other actuarial item under evaluation.

2.2 Actuarial Method—A procedure by which data are analyzed and utilized for the purpose of estimating a future cost or other actuarial item.

2.3 Actuarial Opinion—A conclusion drawn by an actuary from actuarial knowledge or from the application of one or more actuarial methods to a body of data.

2.4 Data—Statistical or other information that is generally numerical in nature or susceptible to quantification.

2.5 Expert—One who is qualified by knowledge, skill, experience, training, or education to render an opinion or otherwise testify concerning the matter at hand.
2.6 Material—An item is material if it has an impact on the affected actuarial opinion, which is significant to the interested parties.

2.7 Principal—A client or employer of the actuary.

2.8 Testimony—Communication presented in the capacity of an expert witness at trial, in hearing or arbitration, in deposition, or by declaration or affidavit. Such testimony may be oral or written, direct or responsive, formal or informal.

Section 3. Analysis of Issues and Recommended Practices

An actuary providing expert testimony performs an important service to the actuary’s principal, the forum, and the public by explaining complex technical concepts that can be critical to resolution of disputes. Actuaries may differ in their conclusions even when applying reasonable assumptions and appropriate methods, and a difference of opinion between actuaries is not, in and of itself, proof that an actuary has failed to meet professional standards. However, an actuary providing expert testimony should comply with the requirements of the Code of Professional Conduct. In particular, the actuary should act honestly, with integrity and competence, and in a manner to fulfill the profession’s responsibility to the public, and should take reasonable steps to ensure that the expert testimony is not used to mislead other parties.

3.1 Review and Compliance—In addition to complying with this standard, the actuary providing expert testimony should review and comply with applicable actuarial standards of practice, the Qualification Standards for Prescribed Statements of Actuarial Opinion, and the Code of Professional Conduct.

3.2 Conflict with Laws and Regulations—If the actuary believes that a relevant law or regulation contains a material conflict with appropriate actuarial practices, the actuary should disclose the conflict, subject to the constraints of the forum.

3.3 Conflict of Interest—The actuary should be alert to the possibility of conflict of interest, and should address any real or apparent conflict of interest in accordance with Precept 7 of the Code of Professional Conduct.

3.4 Advocacy—There may be occasions when an actuary acts as an advocate for a principal when giving expert testimony. Nothing in this standard prohibits the actuary from acting as an advocate. However, acting as an advocate does not relieve the actuary of the responsibility to comply with the Code of Professional Conduct and to use reasonable assumptions and appropriate methods (unless using prescribed or alternative methods or assumptions and so disclosing in accordance with section 3.6).

3.5 Identity of Principal—The actuary should identify the principal on whose behalf the actuary is to give expert testimony. This principal usually names a representative, such as an attorney or manager, to whom the actuary reports during the course of the assignment. Even though that representative may retain or pay the actuary, the actuary’s ultimate obligation is to the principal and not to the principal’s representative. However, in the absence of evidence to the contrary, the actuary may rely upon information and instructions from the representative as though they came directly from the principal.

3.6 Prescribed or Alternative Methods and Assumptions—If the actuary performs calculations using prescribed or alternative assumptions or methods different from the assumptions or methods selected by the actuary in forming the actuary’s expert opinion, the actuary should state, subject to the constraints of the forum, whether the results are consistent with the actuary’s own expert opinion.

3.7 Hypothetical Questions—The actuary may be asked to answer hypothetical questions. Hypothetical questions may fairly reflect facts in evidence, may include only a part of the facts in evidence, or may include assumptions the actuary believes to be untrue or unreasonable. The actuary may refuse to answer hypothetical questions based upon unreasonable assumptions, subject to the constraints of the forum.

3.8 Testifying Concerning Other Relevant Testimony—When the actuary testifies concerning other relevant testimony, including opposing testimony, the actuary should testify objectively, focusing on the reasonableness of the other testimony and not solely on whether it agrees or disagrees with the actuary’s own opinion.

3.9 Cross-Examination—Although the actuary must respond truthfully to questions posed during cross-examinations, the actuary need not volunteer information that may be adverse to the interest of the principal.

3.10 Consistency with Prior Statements—When giving expert testimony, the actuary should be mindful of statements the actuary may have made on the same subject. If the actuary employs different methods or assumptions in the current situation, the actuary should be prepared to explain why.

3.11 Discovery of Error—If, after giving expert testimony, the actuary discovers that a material error was made, the actuary should make appropriate disclosure of the error to the principal or the principal’s representative as soon as practicable.

3.12 Limitation of Expert Testimony—The actuary’s expert testimony should be presented in a manner appropriate to the nature of the forum. If any constraints are imposed or expected to be imposed on the actuary’s ability to comply with the Code of Professional Conduct or other professional standards, the actuary should consider whether it is appropriate to serve or continue to serve as an expert.

Section 4. Commuinications and Disclosures

4.1 Written Reports—Expert testimony delivered by means of a written report should describe the scope of the assignment, including any limitations or constraints. The written report should include descriptions and sources of the data, actuarial methods, and actuarial assumptions used in the analysis in a manner appropriate to the intended audience.

4.2 Oral Testimony—In delivering expert testimony orally, the actuary should express opinions in a manner appropriate to the intended audience. In addition, the actuary should, to the extent practicable, be prepared to document oral testimony.

4.3 Prescribed Statement of Actuarial Opinion—The actuary providing expert testimony should satisfy the Qualification Standards for Prescribed Statements of Actuarial Opinion promulgated by the American Academy of Actuaries in each practice area that is a primary subject of the actuary’s testimony.

4.4 Deviation from Standard—An actuary must be prepared to justify the use of any procedures that depart materially from those set forth in this standard and must include, in any actuarial communication disclosing the results of the procedures, an appropriate statement with respect to the nature, rationale, and effect of such use, subject to the constraints imposed by the nature of the forum.

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