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In these uncertain times, actuaries speak up and are heard

Michel St-Germain, FCIA, CIA President

Actuaries are experts in financial risk management, a constantly changing field that must be well regulated to protect the Canadian public. We have a duty to share our knowledge with decision makers. By taking a frequent stand on relevant topics, we also make our voices heard and engage in essential discussions for society. I have been thinking about what motivates actuaries, the various ways in which we share our expertise, and the pitfalls we should avoid.

What motivates actuaries to take a stand?

The CIA plays a significant role in promoting improvements to the financial system. This role is absolutely in keeping with our goal of putting the public interest ahead of our members. In its strategic plan, the CIA also emphasizes that it must increase its visibility in public debates.

I had the opportunity to meet with a Québec government minister recently to present the CIA’s perspective on retirement age. At the end of the meeting, I felt heartened to hear him say, “As actuaries, you have a lot to contribute to public debates. You are experts in your field, and you think long term. You also know how to protect yourself from the pressures of those who only think about their own interests.” By taking a stand, I believe that our profession helps to build its credibility – we are independent and use our analytical skills to serve the public.

“As actuaries, you have a lot to contribute to public debates. You are experts in your field, and you think long term. You also know how to protect yourself from the pressures of those who only think about their own interests.”

How can actuaries speak up?

The CIA is the voice of the actuarial profession to policy-makers, and the Institute supports them in various ways. First, it responds to consultation requests from public authorities. Year in and year out, the CIA’s Public Affairs Council oversees the preparation of approximately 25 submissions in response to these requests from authorities. For example, more recently, we submitted advice on pension funding rules, a bill framing target benefit plans, and climate change risk disclosure measures in insurers’ financial statements and pension plans. These submissions are written by working groups made up of volunteer actuaries who dedicate several hours to deepen their knowledge on current topics and exchange views with their peers in order to come up with reasonable recommendations.

Second, the Institute meets regularly with regulatory bodies, such as Retraite Québec, the Autorité des marchés financiers (Québec), the Financial Services Regulatory Authority of Ontario, the Office of the Superintendent of Financial Institutions, and the Canadian Association of Pension Supervisory Authorities. Our committees and the Actuarial Standards Board participate in these meetings and discuss with these organizations the changes in our financial system and how the framework must adapt.

Third, the Institute publishes public statements on major current issues. These statements are the culmination of a rigorous membership consultation process. The three public statements released over the past two years aimed to answer the following questions:

  • How can we adapt the retirement age of public plans to new labor market realities (i.e., the tendency of workers to stay in the labor market longer) while recognizing the need to protect more vulnerable individuals who cannot work after the age of 65?
  • How can we disclose the financial risks of climate change so that decision makers and investors can better weigh them and make the right decisions to mitigate the negative impacts?
  • How can we protect Canadians from the risk of high drug costs and how can we improve the efficiency of the drug supply system? In this statement, we say that no one in Canada should be deprived of drugs for financial reasons. Our expertise can help make a drug insurance plan tailored to our needs, more efficient and sustainable.

Also, to continue to make the voice of actuaries heard on various topical issues, the CIA’s Public Affairs Council intends to launch a new initiative in the coming months: the Institute will soon publish another type of statement on topical issues. These “insight statements” will present the issue and analyze possible solutions.

These initiatives demand a lot of work and I greatly thank all volunteers who participated.

What are the main pitfalls to avoid?

Taking a position, whether it’s a submission or a public statement, comes with its share of challenges. Without restricting our role to simple calculations, actuaries must, in the public view, be sure to take a position only on issues on which they have expertise. The profession has the knowledge to contribute to debates about retirement age, the risks of climate change and drug insurance, but it must avoid commenting on matters that are outside its purview.

Another challenge is to ensure that our statements reflect a strong consensus among our members. The CIA Public Affairs Council ensures that our positions are supported by as many of our members as possible.

Finally, in my experience, during meetings with decision makers, we have to communicate to them what we would do in their place. The Institute must suggest possible solutions without all the details being spelled out in full. Our position must be based on an objective analysis of the facts, but it must also take into account the fact that decision makers do not always have the patience to expect perfection in analysis. The strength of the profession lies in its ability to analyze the facts that are relevant and to explain the consequences.

Our financial system is changing, the population is aging, and financial risks are transferred to individuals. Low interest rates are almost unsustainable. Our health care system has been under pressure for several years now. Technology is changing the habits of consumers. Financial institutions are evolving and several new financial products are now available. We can help make these changes in the public interest. And, believe me, policy-makers want to hear from us.

This article reflects the opinion of the author and does not represent an official statement of the CIA.

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