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THE ACTUARIAL AMERICAN ACADEMY OF ACTUARIES VOLUME 24 NUMBER 4 APRIL 1995

THIS MONTH From the Executive Director

Bringing NewVisibility to the Profession : A Conversation with Wilson Wyatt

Life Practice Council News 5 Academy State Health Committee Visits the Hill

B From the ABCD

7 Capitol Views

a Academy Testimony on Social Security

n January 30, Wilson W . Wyatt, Jr. began his duties as Academy executive director. The Actuarial Update staff recently spoke with Wyatt about his experience as a corporate communicator and his goals for the Academy . We offer a portion of that conversation below. UPDATE : Let's talk a little about your background . You came to the Academy with a communications and political background .

WYATT : I have 17 years of corporate experience in public affairs-most recently at the Travelers Insurance Companies, where I was senior vice president of corporate communications and also directed the government relations program .

Early in my career I was a newspaper reporter and a member of the Kentucky legislature . I spent 13 years at a senior level with BATUS, an $8-billion corporation with 70,000 employees

involved in a variety of industries, including insurance, retailing, paper manufacturing, and tobacco . I was responsible for corporate communications and for several years headed the Washington government relations office . I then joined PNC Financial Corporation, which is the tenth-largest banking company in America .

UPDATE: So you're well versed in many of the financial issues that actuaries deal with professionally. WYATT : I certainly know insurance issues . While I was at BATUS we acquired Farmers Insurance Company, and insurance became one of our three primary businesses . As head of their public affairs and communications operations in the United States, I had to master some of the issues very quickly . Proposition 103 was active in California at that time, and working with Farmers, I got to know the California insurance commissioner quite well. That was a baptism of fire in the insurance industry .

Continued on page 4

ENCLOSURES Included with this month's

issue of The Actuarial Update are the following.

Heitzman Nam e Senior Pension Fe ow

In Search Of !i ASB Boxscore

THIRTY

0330 YEARS

Serving the Actuarial Profession

obert E . Heitzman , Jr . has been appointed the Academy's first senior pension fellow. Heitzman comes to the Academy from Ernst & Young LLP, where he was partner and director of international compensation and benefits consulting . He began his Academy duties March 17 . As senior pension fellow, Heitzman will be the actuarial profession's chief public policy liaison on pension matters . His task will be primarily educational . By providing actuarial assistance on technical questions, he will promote the role of pension

actuaries among federal regulators and legislators . "1 am excited by this opportunity to take the profession's expertise directly to policy makers," Heitzman said . "There is no dearth of actuaries who want to contribute, and an obvious need for our expertise . The problem in the past has been a lack of overall direction to our efforts . As a result, our message has been diluted, and many of us have ultimately felt frustrated by the process . "We cannot remedy those things overnight, and we will certainly never reach the point where we all agree on every issue

so that we can speak with one voice . However, we can and should play a significant role in the coming debate on national retirement income policy . My mission is to position us as a profession to do so when the discussion heats up ." A 1970 cum laude graduate of Dartmouth College, Heitzman began his career as a systems analyst with Mutual Benefit Life Insurance Company, leaving in 1972 to serve as second vice president of the S .M . Hyman Co . At Kwasha Lipton from 1975-91, he directed the international division and provided benefit consulting to dozens of U .S . and multinational corporations .

Continued on page 8


kG A111 cl ` t,11 nu 3 d :,U .lva President Charles A Bryan

FROM THE

executive OHIO-- [UP 0111h Zm .

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President-Elect Jack M . Turnquist Vice Presidents John M . Bertko Howard Fluhr David P. Flynn Paul F . Kolkman Charles Barry H . Watson

A Mandate for the Academy By Wilson W . Wyatt, Jr .

Secretary -Treasurer James R . Swenson Executive Director Wilson W . Wyatt, Jr .

EXECUTIVE OFFICE The American Academy of Actuaries 1100 Seventeenth Street, NW 7th Floor Washington, DC 20036 (202) 223-8196 Fax : (202) 872-1948

MEMBERSHIP ADMINISTRATION Woodfield Corporate Center 475 N . Martingale Road Schaumburg, IL 60173-2226 (708) 706-3513

THE ACTUARIAL UPDATE Committee on Publications Chairperson E . Toni Mulder Editor Adam Reese Associate Editors William Carroll Ronald Gebhardtsbauer Patrick J . Grannan Managing Editor Jeffrey Speicher 74764,26201 compuserve .com Contributing Editor Ken Krehbiel Production Manager Renee Saunders

Statements at fact and opinion in this publication , including editorials and letters to the editor , are made on the responsibility of the authors alone and do not necessarily imply or represent the position of the American Academy of Actuaries, the editors, or the members of the Academy.

hen the Academy offered me the position of executive director, I thought I knew a lot about actuaries . Much of my career as a professional communicator has been spent in the insurance and financial industries, so I was well aware of the actuarial profession's important role of analyzing future contingencies and maintaining the sound financial condition of many types of businesses . I had worked with actuaries and had learned to respect their unique analytical skills . However, until I took the executive director post, I did not know about the actuarial contribution to the public policy process . In my first few weeks on the job, I have been impressed with the wide range of technical information that the Academy provides to federal and state policy makers . In the past 2 years alone, Academy committees have offered policy makers an extraordinary amount of valuable technical information . Risk-based capital formulas for casualty and health insurers through the National Association of insurance Commissioners, sixteen monographs analyzing health care reform proposals, and detailed comments on pension legislation and regulation are among many Academy contributions to the process of crafting sound. public policy. So my old reporter's instincts make me ask the question : Why didn't I know about this? Clearly, the Academy's program of providing the profession's impartial expertise to government decision makers is important, is too little known, and

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2 The Actuarial Update • April 1995

should be expanded . So my challenge is to raise the Academy's visibility to a level commensurate with its contributions . Raising the Academy's profile is our mandate . Academy President Chuck Bryan and President-elect Jack Turnquist have emphasized to me that they believe it is time for the Academy to attain a new level of involvement on the public policy stage . Whatever the reasons for the lack of visibility, my instincts as a communications veteran tell me that we can overcome it through an aggressive campaign to communicate the value of the actuarial profession to policy makers and the public. Of course, that is a task that the Academy staff and I cannot do alone . As nonactuaries, our role is to coordinate and promote the work produced by the dedicated volunteers who devote so much time to Academy projects . However, I plan to be very visible in public policy circles and with the media . In answering specific actuarial questions or providing actuarial opinions on issues, I will of course defer to you, the experts . My job is to make sure that policy makers both appointed regulators and elected officials-are aware of the value of actuarial information.

I bring to the Academy a new emphasis on working with elected officials . The Academy's relationships with federal and state regulators are solidly established, but there is a need to spread the actuarial message among legislators . The Academy is and must remain a nonpartisan organization . It must always retain its credibility. However, the profession must become better known

among the ultimate policy decision makers : the people's elected representatives. In the weeks to come, I will be renewing old relationships wits political leaders and developing contacts with members of the new Congress . As lawmakers become more personally aware of the Academy's work, the profession will be called on more frequently to help craft sound legislation . But my time will not be spent exclusively on Capitol . Hill . I intend to be a hands-on, activist executive here . That is my nature . I will take a personal interest in all the work of the Academy as we implement the recently adopted strategic plan . Over the next few months, I hope also to become acquainted with as many Academy members as I can. If you have suggestions on how we can serve you better, I'd be delighted to hear them . I come from a corporate background, from a culture of customer service . The Academy's customers are our members . We're here to serve you and yo interests, and to help hull united and strong actuarial pr fession . I pledge that under my leadership, the Academy and its staff will never lose sight of the fact that we work for you .

The Update welcomes letters from its readers . Letters for publication must include the writer's name, address , and telephone number and may be edited for style and space requirements . Electronic messages may be sent via Actuaries Online to the attention of Jeffrey Speicher, 74764,2620 @compuserve .com .


t council NEWS

By Paul Kofkman

T

he Academy Life Practice Council and its committees collaborate closely with the National Association of Insurance Commissioners (NAIC) . Recent initiatives include :

0 At the request of the NAIC Risk Based Capital Work Group, the council has established a Life Risk Based Capital Task Force, chaired by Cande Olsen . Meeting for the first time on February 27, the task force concluded that recent proposals to change the mortgage factor in the risk-based capital formula require further study .

Academy Vice President Paul Kolkman

Continued on page 8

Life Practice Council Paul Kolkman , vicepresident (202-223-8196, ext . 252)

Key Issue Life and Health Standard

Academy Objective

Academy Action

Assist appointed actuaries in complying with state low

COLIFR considering improvements and updates to current manual

Assist life & health actuaries in keeping informed

Life Practice Notes 1-14 updated and mailed

Valuation Low Manual

Life Practice Notes

on state valuation laws and regulations IIrourence Sales Illustrations

Provide technical expertise to NAIC, States, and Federal government

COLT has reviewed NAIC draft model regulation and ASR draft standard . ( OLI will comment

on actuarial aspects of this issue

to the ASB on various issues including certification of disciplined current scale , treatment of overhead, reinsurance and taxes, and asset share technique .

Life Nonforfeiture Model Law

Provide technical expertise and assistance to NAIL Life Actuarial Task Force in drafting model law

COLT discussed possible principles and timetable for model law with choir of HAI( Life and

Annuity Nonforfeiture Model Law

Provide comments to NAIC committees as law moves through adoption process

NAIL Life Insurance (A) Committee exposed revised draft at March meeting

Quality of Asset Adequacy Opinions

Enhance consistent application of Standard Valuation Laws

No action taken yet in 1995

Recommend improvements to quality of actuarial opinions ;

COLIFR may sponsor conference for opinion writers

Health Actuarial Task Force

identify profession' s concerns about standards of practice Ascertain regulators ' perception of opinion quality and usefulness

Focus groups with regulations under consideration

Educate regulators and insurers an dynamic analysis of financial condition

Regional seminars for regulators under consideration

Provide analytical and research support to NAIC Life Risk Based Capital Working Group

Life Risk Based Capital Task force formed in response to NAIL request

Review NAIC study of impact on insurers of RBI formula changes

NAIC staff study nor complete

Provide NAIC with theoretical study of C-1 risk issues in Life RBI formula

Will conduct study on NAIC request

SAP/GAAP

Comment on actuarial aspects of project

COLIFR and Financial Reporting Steering Committee are reviewing NAIC preliminary report ; COLIFR monitoring Price-Waterhouse codification project

Life Insurance Risk Classification

Educate policy makers and consumer groups on risk classification issues

Committee on Risk Classification white paper for slate commissioners, consumer advocacy groups, and interested policy makers slated for June

Provide technical support to NAIC on risk classification and genetic testing issues

Volunteers with appropriate experience being added to Committee on Risk Classification

Educate FASB on actuarial aspects of the treatment of liabilities

After release of final report , (OIIFR and FRS( members will discuss findings with FASB ;

Life Risk Based Capital

0 Fair Value Accounting Project

COLIFR to adapt study for broader audience

The Actuarial Update -April 1995


I

Ui V~, continuedfrom page 1

UPDATE : You were involved in another interesting battle that involved insurance, weren't you?

Academy Executive Director

WYATT : At BATUS I directed all the U .S . public affairs activities to defend B .A .T . Industries against a $21billion hostile takeover Wilson Wyatt attempt led by Sir James Goldsmith and Lord Jacob Rothschild . During that 10-month defense we had to develop immediate and deep relationships with the operating units of each BATUS enterprise in forty states . I had to learn a great deal about those businesses very, very fast . I had to know enough to work with employees, unions, and elected officials at all levels of government-including senators, congressmen, governors, state legislators, and insurance commissioners. This was a totally new kind of battle in terms of communications and government relations . It was a real learning experience . UPDATE : And you were successful . WYATT : Yes . Actually, the insurance side of the business was the key to our victory. We placed particular emphasis on the nine states where our insurance businesses were headquartered and where the insurance commissioners had to approve or disapprove the sale . We won when the commissioners basically said no. That fight taught me what can be accomplished if you know and understand the public policy process . . . and how business fits within that process . UPDATE : So the fact that you are not an actuary will not be a drawback as executive director?

4 The Actuarial Update ∎ April 1995

WYATT : No, to the contrary . Clearly, the Academy came to me because they thought J could help the profession by applying my own skills in communications and public policy development . If I had been an actuary, that would have been a plus . But what they really wanted was someone who could raise the visibility of the profession and the Academy with public policy makers and the press . This is an exciting opportunity.

UPDATE : As a professional communicator, how do you see the role of the Academy? WYATT : The Academy does a fine job of providing reliable information. This information is the engine that drives our program . My job will be to make sure that word goes out to policy makers, the media, and ultimately the public . Providing actuarial expertise to the public policy process is the key to raising the visibility of the profession . I've always looked at public policy as a part of communications. I don't separate them . I think that actuaries have knowledge that can be of tremendous benefit in the public policy process . On health care reform, for instance, the Academy actually did an impressive amount of work last year . The debate will continue for years at both the federal and state levels, and the actuarial profession ought to be involved because we can give important assistance to lawmakers .

UPDATE: What are some of the other issues the Academy might take on? WYATT : Actuaries are certainly going to be major players in the debate on retirement income security . Natural disaster insurance is a policy question where the profession's expertise will be important . Another timely issue is the risk involved in investments for corporations and for governments . The profession could certainly be much more visible in areas where actuarial analysis could be of tremendous benefit to the public .

UPDATE : Do you see the need to define the Academy' s message more precisely? WYATT : Yes . In communical* tion terms I don't think we have a good definition that would mean much to anybody right now. Lack of a defined message means that public knowledge of the profession and what it has to offer is not nearly broad enough . The Academy' s mission is not widely understood . It will take time to get there. It's particularly important to get our message to policy makers . I don't think many elected officials sit in their offices thinking about the value of actuarial information . There's a big gap to he bridged . If we show them that value, however, telling them in their own language-we can be a much bigger asset to the public policy process . We need to develop relationships with elected officials as well as with staff. After all, elected officials are the primary participants in the public policy process . They make the compromises and ultimately, t final decisions . We have so real work ahead of us to ensure that they recognize the value of the actuarial profession to their work .

UPDATE : How will you go about that? WYATT: We will need to target the key issues that elected officials are interested in and provide quality information in a timely manner . We can 't wait to be asked . We have to develop relationships. UPDATE: You emphasize relationships. WYATT : Relationships are important because elected officials need to trust the people who give them information . There are thousands of people trying to give information to lawmakers . I saw the importance of trust when I worked on mg state banking questions with Senate . I got involved in that process because certain members of the Senate who needed assistance knew me . They weren't


looking for the position of my employer ; they were looking for honest, straightforward helpand they trusted me on a personal level to give it to them . Building relationships will lead to the utilization of the profession in the public policy process . There's no question about it .

The public policy process is unique . Most people do not fully understand it . I have an advantage in having been both an elected official and a reporter early in my career . . . reporting on the process and participating in it . UPDATE : So you see a lot of work to be done to enhance the Academy commun ications and public policy effort? WYATT : Yes, but we are starting with a good foundation . The reputation of the Academy is good. Unfortunately many people who work in the public policy process don't realize how actuarial information can be useful to them in the process . A lot

f good work has been done, and e Academy 's reputation is excellent among the people who know it . The Academy is highly respected by the NAIC, for example . That didn't use to be the case . So the Academy is becoming known among policy makers . But it's our desire to make the profession better known for the value that it brings to society . These large public issues certainly provide the opportunities . UPDATE: Do you see the general public as an important audience for the profession's message? WYATT : Yes . The public should know that actuaries contribute to the common good . This country really needs impartial technical information in the public policy process . You can hire a consultant to provide almost anything to support any view . I think that the peerrew process that the Academy 0ees through ensures that the information we provide is sound and unbiased . As long as the officials we're dealing withwhether elected or appointed-

know that, then we are acting on behalf of the public. The Academy has built a reputation for quality : This is a good platform . We shouldn ' t be timid about the issues we choose to analyze and about the breadth of

the information we provide . The more timid we are, the less we will be involved. The less we are involved, the less we are known to our publics . Our goal must he involvement .

ACADEMY BRIEFS HILL ON HEALTH ISSUES Academy State Health Committee members led two educational sessions on health insurance issues in the U .S . Capitol last month . On March 3, committee chairperson Bill Bluhm and Donna Novak briefed congressional staffers on the definition of risk in health insurance and Academy State Health Committee memhow risk is treated in ber Bill Thompson at the March 10 the principal types of briefing in the U.S . Capitol . health plans . Solvency was the focus of the March 10 session . Bill Thompson and committee vice-chairperson Peter Perkins outlined the causes of health insurer insolvency and offered a detailed summary of solvency regulations, with emphasis on the risk-based capital formula recently developed by an Academy work group. The briefings were sponsored by the Employee Benefit Research Institute (EBRI) and were intended to educate Capitol Hill staff on health issues . The recent Republican takeover of Congress has brought to power a new crop of influential policy aides seeking technical advice . Participation in the EBRI sessions is part of a broad Academy effort to ensure that the new Congress understands the value of actuarial expertise . Attendees included key staff members from the House Commerce Committee, Senate Labor and Human Resource Committee, and Senate Finance Committee ; staffers representing eleven individual senators and twenty-one House members ; health analysts from Washington policy organizations ; and trade press reporters.

The Actuarial Update ∎ April 1995 5


FROM THE

W The Actuary and Advocacy some time in the course of a career , most actuaries find ~7 themselves in an advocacy position . It is only natural to want to please a client or employer, or to support a personal conviction . Actuaries should be aware of the challenges to their professionalism that are inherent in such situations . Professional responsibility must take precedence over all other considerations, including the advancement of personal advocacy positions or the advocacy positions of clients or employers . Professional integrity is at the heart of the Code of Professional

At

Next month in The

time be an advocate for a particular position on a political or social issue . The right to advocacy is guaranteed in the First Amendment to the U . S. Constitution, which protects free speech . This right is specifically recognized in Actuarial Standards of Practice Numbers 9 and 17 . Section 5 .4 of ASOP No . 9 provides that : "When an actuary acts, or may seem to be acting, as advocate for a client or employer, the nature of that relationship should be disclosed to directly interested parties ." Section 5 .3 of ASOP No . 17 further states that "There may be occasions when an actuary acts as an advocate for a client or employer when giving expert testimony ." This right to advocacy carries with it certain duties . For

Actuarial Update :

to avoid comments that malign the reputation of the actuarial profession . Precept 2 requires an actuary to perform professional services with integrity, skill, and care . Again quoting from section 5 .3 of ASOP No . 17 : "When acting as an advocate, the actuary should remember that reasonable assumptions, appropriate methods, and supportable opinions should be used."

Taken together, these precepts require that actuaries who advocate positions avoid bias in their work . Bias may still exist in the selection of parameters, data, and techniques . The advocating actuary is in a position of having to defend these choices in a public forum and, if necessary, in an ABCD investigation . Precept 9 is also applicable to advocating actuaries . It stat simply that "An actuary shall n perform professional services when the actuary has reason to believe that they may be used to mislead . . ." While this precept does not preclude an actuary from being an advocate, it does preclude providing performance of professional services in circumstances that may have devious objectives .

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scenes from a

new video that

uses humor to

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of the ABCD

another actuary's professional work product . When this is done, the advocate must be certain that sweeping personal criticisms are avoided and that tech-* nical criticisms are supportable . The advocate must also take care

Academy staff attorney Tom Griffin (left) and ABCD chairperson Norm Crowder at the March 3 ABCD meeting in Atlanta .

Conduct of the U .S.-based organizations that represent actuaries . Precept I of the Code requires an actuary to act honestly and in a manner that upholds the reputation of the actuarial profession and fulfills the profession's responsibility to the public. Precept 2 requires an actuary to perform professional services with integrity, skill, and care. A scrupulous actuary might ask whether it is possible to uphold high standards of professional integrity and at the same

The Actuarial Update - April 1995

instance, the zealous advocate must avoid violation of laws prohibiting acts that maliciously injure reputation or community standing of other parties if advocacy activities focus on individuals or groups of individuals . A good defense against defamation of character and other similar charges is to avoid involving personalities in advancing positions on political or social issues. At times, strategic advancement of advocacy positions may cast doubt on the quality of

This article is one of a series written by the Actuarial Board for Counseling and Discipline to aid actuaries in complying with the Code of Professional Conduct of the U.S.-based organizations. It is not necessarily based on inquiries or requests for guidance received by the ABCD or on cases before that body, although such events may provide a source of subject matter. These articles are advisory in nature . The applicability of professional standards to specifi~ situations can be determined only from the facts associated with those situations. Actuaries are encouraged to suggest topics for further articles .


capitol Sweeping product liability legislation that caps medical malpractice pain and suffering awards at $250,000 has passed the U .S . House of Representatives . The medical malpractice provision is an amendment to the product liability bill of the Republican Contract with America . The amendment was sponsored by Rep . Christopher Cox (R-Calif.) . Another Cox amendment approved by the House would eliminate joint and several liability in al] civil actions, not only product liability suits . Under the provision, noneconomic damages would be apportioned to match parties' degree of responsibility for an injury. A third amendment approved by the House would protect manufacturers and sellers of pharmaceuticals and medical devices from punitive damages if eir products had been proved by the FDA before introduction . The damage cap was not included in the original product liability bill because House Republican leaders wanted to omit health-related issues from the Contract . However, pressure from the medical industry led the Republicans to add the measure during floor debate. The issue now shifts to the Senate, where the leading Republican advocate of product liability reform, Sen . Slade Gorton (RWash .), indicates he will not include House provisionsincluding medical malpractice reforms-that would complicate passage of the product liability hill he will introduce with Sen . Jay Rockefeller (D-W . Va .) . If the Gorton-Rockefeller measure passes, House-Senate differences will be worked out in conference. The Senate Commerce Committee is expected to hold hearon product liability in late Aril or early May . Committee members will receive an analysis from the Academy's Malpractice Reform Work Group, which,

among other things, has concluded that a $250,000 cap on noneconomic awards would be a key component of an effective reform package . The same analysis was sent to key House members last fall . Insurers who offer long-term care coverage would be subject to federal consumer protection standards under bipartisan legislation introduced in the House by Reps . Ron Wyden (D-Oreg .), Connie Morella (R-Md .), Ralph Regula (R-Ohio), and Joe Kennedy (D-Mass .) . The bill would set underwriting and marketing guidelines for long-term care policies . The bill charges the National Association of Insurance Commissioners (NAIC) with developing model standards for state regulations . If within a year the NAIC had not developed standards, the bill would require the Department of Health and Human Services to issue regulations . The measure coincides with the Republican tax package, which contains tax exemptions for long-term care insurance . Under the tax proposal, longterm care insurance contracts would be treated like accident and health insurance contracts : All benefits-other than dividends or premium refundswould be excluded from income . If passed by Congress, the provision would be the first tax code revision to make long-term care insurance more affordable for the chronically ill. Supporters of the consumer standards legislation want to ensure that the increased sales of long -term care insurance policies that may result from tax changes will he accompanied by effective consumer protection standards . It is not yet clear whether the bill's sponsors will push the bill on its own or try to amend the Republican package . The Republican tax bill also includes provisions to : extend tax-favored treatment for amounts received as accelerated death benefits under qualified

life insurance contracts to amounts received under qualified viatical agreements ; roll back to 50% from 85% the taxable amount of Social Security benefits ; and establish a new IRA called the American Dream Savings Account, which would allow taxpayers to make tax-free withdrawals for specified purposes . The tax package cleared the House Ways and Means Committee on a March 14 party-line vote . The House Ways and Means Committee has also approved two bills that slash Medicare costs . The first bill would expand Medicare Select, a fifteen -state pilot project that allows seniors to purchase Medigap policies through HMOs . Sponsored by Rep . Nancy Johnson (R-Conn .), the bill would make the program permanent and available in all fifty states . A second bill would extend Medicare cost - saving provisions enacted in a 1993 law . The bill would require the elderly to continue to pay 25% of the premiums for their Part B insurance ; ignore the effects of inflation in 1994 and 1995 in calculating a new 1996 spending baseline for the services of home health agencies and skilled nursing facilities ; and retain Medicare as the secondary payer for disabled workers with private coverage from employers . Arkansas Gov . Jim Guy Tucker has signed legislation that requires managed care networks to accept any provider willing to abide by the terms of the network . On a related note, the Wyoming state legislature has approved a bill that would prohibit HMOs from barring any provider willing to meet an HMO plan's terms . The Wyoming bill also grants the insurance commissioner greater regulatory authority over HMO operations, including reserve reporting requirements .

Quote

of the Month In a March 8 decision that upheld a Tax Court ruling in Citrus Valley Estates v. Commissioner, the U .S. Court of Appeals in San Francisco supported the actuarial role in setting pension plan assumptions . The court wrote that "Congress consciously left the specifics of . . . plan funding in the able hands of professional actuaries ."

The Actuarial Update ∎ April 1995 7


Look at Long-term, Fluhr Urges Social Security Council

ness, labor, and governmental leaders-including Academy member Mark Twiney, chief actuary of the Ford Motor Company.

R etirement income policy is a long-term issue that requires a comprehensive approach,

HEITZMAN , continued from page 1

Academy Vice President Howard Fluhr told the Advisory Council on Social Security at a March 9

In his remarks, Fluhr emphasized the importance of private pensions to a sound Social Security system . But, he added, employers who offer pensionsespecially defined benefit plansbear the costly burden of complying with onerous regulations .

"All three components of the traditional three-legged stoolSocial Security, private pensions, and individual savings-are wobbling . We need an organized attempt to restore its balance . Actuaries have been a voice in the wilderness pointing out the necessity of looking at the long term, and the profession stands ready to offer its tools to help craft a solution for the good of the American public ." Howard Fluhr testifies before the Advisory Council on Social Security . At right is Peter Ferrara of the National Center for Policy Analysis .

hearing in Washington, D .C . Fluhr urged establishment of a bipartisan national retirement income commission to "lay out the nation's retirement wish list, determine the costs, and decide what we can afford."

The Advisory Council invited Fluhr to testify on behalf of the Academy. The council, appointed in 1994 by U .S . Health and Human Services Secretary Donna Shalala, is examining the longrange financial status of the old age, survivors, and disability trust funds and the interrelation of public and private retirement income programs . Its members constitute a cross-section of busi-

LIFE, continued from page 3 Li Frank Dino , chief corporate actuary of the Colorado Department of Insurance and chair of the NAIC Life and Health Actuarial Task Force (L&HATF), briefed a February 28 meeting of the Committee on Life Insurance (COLI ) on the Life Nonforfeiture Model Law and outlined basic principles he will propose at the March NAIC meeting .

Cande Olsen presides at the Feb. 27 meeting of the Life Risk Based Capital Task Force.

8 The Actuarial Update ∎ April 1995

U COLI committee member Dino also identified two new NAIC L&HATF charges that the

Under contract with the Harvard Institute of International Development in 1992-93, Heitzman helped craft social security and pension policy for the Ministry of Finance of Indonesia . Heitzman is a fellow of the Society of Actuaries, and has served on the board of directors of the Conference of Consulting Actuaries and as chair of the Enrolled Actuaries Meeting Joint Planning Committee . He has published extensively in the trade press and academic journals, and is author of Employer's Guide to Social Security, published in 1993 by John Wiley and Sons . Heitzman was selected by a task force led by Academy Pension Vice President Howard Fluhr . Other members of the task, force were Michael Callahal president-elect of the American Society of Pension Actuaries ; Jeff Furnish, president-elect of the Conference of Consulting Actuaries ; and Neil Parmenter, representing the Society of Actuaries . ;b

practice council may elevate to kev-issue status : revision of the Life and Health Standard Valuation Law and the Actuarial Opinion and Memorandum Model Regulation, and review of the model regulation for life reinsurance . For a listing of all key council issues and activities, consult the hoxscore on page 3 .

Academy Vice President Kolkman chairs the Life Practice Council.

4D


April 1995 Actuarial Update