University of Cyprus
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Actuarial Independence and Managerial Discretion.
Kamiya, Shinichi and Andreas Milidonis.
Journal of Risk and Insurance 85, 1055-1082.
Publication year: 2018
Actuarial independence is important when appointed actuaries oversee insurance reserves.
In-house appointed actuaries could be officers or non-officers of the company.
Officer actuaries face managerial incentives that could jeopardize actuarial independence.
Using data from 2007-2014, we find that in-house officer actuaries are less conservative than non-officer actuaries.
Results are economically significant and should be of concern to regulators and professional institutions.