Actuaries are recognized for using mathematics in certain ways to estimate the financial obligations of a company. These approximations directly affect the company’s financial situation and outlook for the year. As any other professional occupation, standards must be followed to ensure the validity of the work being done. Risks of malpractice may arise if actuarial principles are not followed carefully. Actuarial malpractice has become a rising concern in holding actuaries liable for their work, where in previous years it was unheard of.
For most professionals, designations must be acquired through a series of training and schooling. In the United States, actuarial candidates have the opportunity to be a part of the following organizations: the Society of Actuaries, the Casualty Actuarial Society, the Conference of Actuaries in Public Practice, and the American Academy of Actuaries. Each of these societies has specific requirements in the realm of passing exams and attaining work experience in the actuarial field.
According to William Hager in The Emerging Law of Actuarial Malpractice, “the actuarial consultant is specifically holding himself out to the public as an expert in the actuarial field and as a result, has rather significant exposure”. Examples of liability exposure could be flawed benefit calculations in a valuation, incorrect funding calculations leading to an excise tax penalty, or not giving proper precautions to the company. Even in the case where given data is erroneous; the actuary is responsible for clarifying the questionable data with the client. Therefore, they are held accountable in a court of law for being aware of all errors and not assuming any...