Actuary.org Tries to Punt
In January I invited the Society of Actuaries to review my policy disclosure approach and either: 1) endorse it, or 2) sponsor a competition, if necessary, to try to find a better disclosure approach to endorse. The Society of Actuaries, stating that the American Academy of Actuaries (a.k.a., Actuary.org or AAA) is the profession’s organization on public policy matters, encouraged me to re-direct my letter to the AAA. My letter – http://www.breadwinnersinsurance.com/wp-content/documents/FOA%20letter.pdf – is a good summary of the actuarial profession’s negligence with respect to their “contributions” to the dysfunctional the life insurance marketplace. Naturally, all are encouraged to read my January letter to the actuaries.
In late February, the American Academy of Actuaries responded to my invitation with the email below. Last week, in reply to their attempt to dismiss my invitation, I asked the AAA to resume their work on evaluating my disclosure approach and addressing the other issues raised in my original letter.
Please read these replies below. And know, as always, your own insightful and pithy views are invited, and your assistance in all forms (as an insurance buying client, a referral source, or as a Partner for Reform) is most gratefully appreciated. More importantly, I guarantee, getting involved will make you feel good.
Email from John Meetz of the AAA on Wed, Feb 23, 2011 at 10:46 AM
The Academy’s Illustrations Group reviews proposals to modify Illustrations and disclosures that are under consideration at official regulatory or legislative groups. We limit our comments to the actuarial aspects of the proposals and do not comment on other issues. As such, our current work with Illustration proposals addresses the calculation specifics for certain products whose features differ from the traditional life products and not fully contemplated by the Illustration Regulations. While these other issues may be important to the overall conduct of the insurance business, we limit our comments to our area of expertise. The Academy is a professional organization whose work is conducted by volunteers. Due to the natural time limitations of working with volunteers, we must limit the scope of our work. While we have performed a cursory review of your proposals, we are not in a position to engage in further discussions with you on your proposals. We suggest you work through the established channels at the NAIC to get your ideas exposed to regulators and interested parties.
John H Meetz
Policy Analyst (Life) American Academy of Actuaries …….
My March 4, 2011 emailed reply to John Meetz at the AAA
Dear Mr. Meetz:
I am sorry to have to inform you that I think your reasons for declining to thoroughly review my policy disclosure approach are unsatisfactory. Your position indicates none of the initiative or societal concern that any self-respecting professional organization should have. Furthermore, your reply violates the AAA’s mission and vision statements – http://www.actuary.org/mission.asp – and certainly raises questions regarding compliance with AAA’s Section on Integrity in its Code of Professional Conduct. These words aren’t written to be harsh or mean; accomplishing things, as I am sure you agree, requires everyone to speak frankly about important issues and to hold others accountable.
Your reply, I assert, is unsatisfactory to the American public because Americans deserve, have always deserved, appropriate disclosure of life insurance policies. Actuaries have a professional and civic duty to contribute to such. Yet, the facts are that although nearly 20 years ago the AAA recommended that use of the interest-adjusted indices be discontinued, these defective indices remain (which is not to imply that they are used or useful; the AAA’s recommendation to discontinue was a very sound and good recommendation, albeit 15 to 20 years tardy.)
If the AAA cannot readily recognized my invitation/request to review my disclosure approach as a project that could be undertaken as a natural, logical continuation of the AAA’s prior work on disclosure, or if the AAA, knowing the paramount importance of product disclosure, does not have the initiative to seek the instructions it purportedly requires from regulatory or legislative groups to pursue such important review work, then you, John, have essentially acknowledged that the AAA is virtually incompetent or impotent.
Below is a copy of your email in which I have annotated with some additional specific rebuttals. As I am essentially a one-man band working to fix a dysfunctional trillion dollar industry, I hope you can accept my informal shortcuts as I endeavor both to work productively with the AAA and others on this vitally important matter while at the same time continuing to serve my ever growing list of clients.
So as to be unmistakably clear, I hereby assert that I think the AAA needs to find a way: 1) to resume working on reviewing my policy disclosure approach, and 2) to respond to the many other issues in my original letter. Although you have not previously taken advantage of my written overtures to call me to discuss matters, nor returned any of my own calls, I reiterate my suggestion that such dialogue could be very useful. I look forward to hearing your thoughts about how the AAA will now proceed, and to our starting anew to build a good and productive business friendship.
Copies Sent to AAA Executive Director Mary Downs, Director of Public Policy Craig Hanna, and Actuary Nancy Bennett.
Annotated Copy of Mr. Meetz’s Email On Wed, Feb 23, 2011 at 10:46 AM, John Meetz wrote:
Brian, [Annotated comments set-off in new parenthetical paragraphs.]
The Academy’s Illustrations Group reviews proposals to modify Illustrations and disclosures that are under consideration at official regulatory or legislative groups. We limit our comments to the actuarial aspects of the proposals and do not comment on other issues. As such, our current work with Illustration proposals addresses the calculation specifics for certain products whose features differ from the traditional life products and [were] not fully contemplated by the Illustration Regulations. While these other issues may be important to the overall conduct of the insurance business, we limit our comments to our area of expertise.
(What other issues are you referring to? Certainly, one possible reasonable assumption readers can make is sales misrepresentations. If AAA thinks that sales misrepresentations are part of the overall conduct of the insurance business but somehow truly outside of the AAA’s expertise, please explain.)
[Mr. Meetz continued:] The Academy is a professional organization whose work is conducted by volunteers. Due to the natural time limitations of working with volunteers, we must limit the scope of our work.
(First, I believe that the AAA has some paid professionals. Second, while every organization has resource constraints, you have provided no satisfactory answer for why or how reviewing my disclosure approach, itself, would be such an unacceptable burden for the AAA. I contend that there could be no project of greater significance or worthiness for AAA than to endorse an appropriate policy disclosure approach; and undertaking a review of my disclosure approach, and, as my original letter requested, either affirming or, if fault is found, rejecting it, and providing something better is clearly part of such a project. If the AAA thinks that product disclosure is not of paramount importance and worthy of AAA allocating resources (and volunteers) to such, I think all four of you – Ms. Downs, Ms. Bennett, Mr. Hanna, and you – ought to sign such a statement documenting your unanimous concurrence with such a position.)
[Mr. Meetz continued:] While we have performed a cursory review of your proposals, we are not in a position to engage in further discussions with you on your proposals.
(Given its cursory review, I think the AAA, at the very least, ought to have provided in writing its initial perspective on my disclosure approach. But again, neither the American public nor I would find a cursory review satisfactory. Certainly, you may have a different perspective regarding this “obligation” that you might assert I am bestowing on you, but I think it is necessary for the AAA to go on the record on these matters. As a country, America can no longer afford superficial performances or any other unproductive practices.)
We suggest you work through the established channels at the NAIC to get your ideas exposed to regulators and interested parties.
(So again, if I’m understanding your email, if the NAIC asks you to review my approach, you would then review my approach, right? And, if that’s the case, certainly you must recognize that your emailed reply has a most bureaucratic element to it. Because if you are wanting me to write to the NAIC to ask it to so instruct the AAA, I will naturally ask you and the AAA whether you/the AAA supports my request. I of course assume that the AAA would support this request, because of the above facts already cited about the importance of this project. And for those same reasons, that the NAIC, or another body from which you purport to need instructions, would so instruct the AAA to proceed with the project. Which again will merely lead us back to Square 1; that is, where you were a month ago upon receipt of my letter. Because, since Policy Disclosure is an undeniable imperative in a properly functioning marketplace, the NAIC or some other regulatory or legislative body will, recognizing the existing problems, want the AAA to investigate the subject, and the AAA will have to perform the review. John, if the AAA wants to accomplish nothing on this vital public policy matter, I suppose it can merely continue functioning as it has as a life insurance industry lackey for the past 40 years. On the other hand, if you are committed to building a better world, as I suspect you and some of your honorable peers are, once the fears of reforming the dysfunctional life industry have been silenced, then I invite you and your AAA associates to take a few lessons from the technology leaders in our society, roll-up your sleeves, and get to work on our industry’s most important and significant problem – a problem that has been left unsolved for more than 40 years: Appropriate Actuarially-Approved, Regulator-Mandated, Consumer-Useful Policy Disclosure. Please, John, let’s not engage in any more bureaucratic stalling dances. Again, I’d like for us to have a good and productive business friendship. Sincerely, Brian)
[Meetz’s email concluded with his name and contact info]
Again, if you haven’t read my January letter to the actuaries, please make sure that you do, as I think you will find it most worthwhile. My letter documents – http://www.breadwinnersinsurance.com/wp-content/documents/FOA%20letter.pdf – the actuarial profession’s following failures in the life insurance arena: 1) failure to denounce sales presentations relying on simple sum of premiums where premiums have not been adjusted for the time value of money, 2) failure to answer Professor Belth’s 1970 question about its professional responsibilities, 3) failure to respond to Actuary John Keller’s public acknowledge of Northwestern’s knowledge of consumers’ likely dissatisfaction about past purchases if they were subsequently properly informed about products, 4) failure to advocate that sales illustrations are not to be used for comparative purposes, and 5) failure to provide the long-needed new Life Insurance Buyer’s Guide. My letter also encourages the actuaries to begin to make amends for their past professional conduct by: A) performing annually 10,000 of public service, B) establishing an unemployment insurance fund for failed life insurance agents, and C) redesigning their continuing education requirements to include much more effectively address issues pertaining to advocacy and ethics.
The reason that many problems persist is that people put-up with or accept such. Two reasons Middle East dictators have endured are that they have had bullets and their people have had fears. Obviously, if those oppressed people can rise up against armed dictators, we Americans ought to be able to rise up against the dysfunctional life insurance industry and its accomplices (the AAA, NAIC, etc.). At least, that’s what I believe. What do you believe, and think…., or want to know…., and want to do?
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One Response to “Actuary.org Tries to Punt”
John H. Meetz at Actuary.org says:
March 8, 2011 at 9:28 pm (Edit)
[Yesterday afternoon, Mon, Mar 7, 2011 at 3:39 PM, while I was trying to fix a software glitch in my blog, after having written the above blog, I received the following from Mr. Meetz at Actuary.org].
I am sorry that you don’t agree with our response to your email, but we still feel the same way, and we don’t intend to put any more resources into this issue.
John H Meetz
Policy Analyst (Life)
American Academy of Actuaries
[Certainly sounds like the AAA thinks they can duck this issue of appropriate policy disclosure in 2011 as they have done for the past 40+ years.
Whether or not they can is really in your hands, not mine. Who do you know that should know about this issue? Who do you know that should know about Breadwinners' Insurance? The dysfunctional life insurance industry will be transformed once anyone with power demands that the age-old informational problems be solved.
These thoughts in bracket are the comments of Breadwinners' Insurance Founder, Brian Fechtel.]