When the law conflicts with standard of practice

Hi. I am looking to use a statement for a talk to college students that goes something like this:

An actuary is obligated to obey the law in ratemaking, even if the law conflicts with actuarial standards of practice.

I can’t find the source of that statement, as it relates to P&C. Is this statement still accurate, and if so what is the source? I would think it would be in an ASB ASOP.

Thank you.

It’s baked into most of the asops. “Do this, but always follow the law first.” I’m pretty sure it’s mentioned alongside confidentially, picking interest rates, picking pricing parameters, and other places.

Although I’m having trouble finding explicit references, too.

I did see
In asop 13, trending:

c. the disclosure in ASOP No. 41, Actuarial Communications , section 4.2, if any material assumption or method was prescribed by applicable law (statutes, regulations, and other legally binding authority);

Oh, here it is, in asop 1


There are situations where applicable law (statutes, regulations, and other legally binding authority) may require the actuary to deviate from the guidance of an ASOP. Where requirements of law conflict with the guidance of an ASOP, the requirements of law shall govern. The ASOPs provide guidance on this and other situations where the actuary deviates from the guidance of an ASOP. (see section 4.5).


Thanks Lucy, that’s perfect.

I actually invoked this requirement once, in the long-forgotten CAS Ratemaking Contest of 2000, where Texas law at the time I believe prohibited including advertising expenses in the rate. (My team came in last. And second.)

Separately from this, I long ago commented on the Expense ASOP and helped get the provision for reinsurance included, which I was doing in the late 90’s.