Is Serving as an Expert Witness in Your Future? You be the Judge

Is Serving as an Expert Witness in Your Future? You be the Judge

Darryl G. Wagner

Actuaries are stepping into a variety of what some may call non–traditional roles and are becoming more recognized in a vast array of fields. One of the roles receiving more attention as of late is the actuary as an expert witness. Though hundreds of actuaries have stepped into the role of expert witnesses for years, companies, attorneys and clients in general are recognizing their invaluable input as it relates to fairness of legal decisions. Because of their analytical skills, keen understanding of complex and specialized issues and ability to articulate and quantify the specifics of these issues, actuaries make reputable and key expert witnesses and are very much in demand in and outside of the courtroom.

Two articles on actuaries as expert witnesses are included in this issue of The Actuary. The first piece, "Taking the Stand... The Actuary as Expert Witness" by Darryl G. Wagner provides a broad definition of what actuarial experts are, what they do and how their expertise and experience benefits our judicial system. Wagner's professional experience includes providing litigation support consulting services to numerous clients, both in testifying and non–testifying roles.

In "Firsthand Testimony from a Health Insurance Expert, "Barbara Niehus provides a personal account of some real life experiences as an expert witness. She explains some of the issues she has encountered, such as pricing concepts, plan benefits and financial reporting. Niehus also discusses how her role as an expert witness has given her a greater appreciation for the standards of the actuarial profession. Her professional experience encompasses a broad range of management and technical functions including product design, regulatory compliance and litigation support and management.

  • Taking the Stand...
  • The Actuary as Expert Witness
  • by Darryl G. Wagner

The American justice system is a hallmark of our democratic government. We, as actuaries, have both the privilege and responsibility to participate professionally in that system, as expert witnesses and in other roles, with respect to matters involving our areas of expertise.

What is an Actuarial Expert Witness?

An actuarial expert witness is an actuary who is called upon by a party to a legal dispute to present expert testimony. This testimony typically involves bringing the actuary's expertise to bear on questions raised in the dispute. Disputes may involve a broad range of actuarial issues, including pricing and reserving practices of insurance companies, benefit plan provisions and corresponding benefit quantification in an employer setting, and actuarial appraisal results. While the overall dispute may involve broader issues (e.g., the price paid by one insurer for another), the role of the actuary is to focus on issues that fall within his or her area of expertise (e.g., the results of an actuarial appraisal on which, in part, the purchase price was based).

Stepping Outside the Courtroom

While the term expert testimony is typically used to describe this area of work, it actually only encompasses part of the range of services an actuary might provide regarding a legal dispute. Many legal matters are settled without reaching a courtroom, and, therefore, never require an expert to testify. However, a great deal of work must be done prior to presentation of a case in court, whether or not the case actually reaches that point. The actuary might be involved in reviewing information related to the case and helping the parties to the dispute and their legal counsel better understand the issues. The actuary may also be instrumental in forming strategies for the case, being deposed as part of the discovery process and/or assisting the legal team in deposing another party. Providing analyses relating to the case to quantify damages or just helping the legal team better understand the sensitivity of the issues involved to various impacts may also fall on the shoulders of the actuary as expert witness.

It's not uncommon for a legal team to engage both testifying and non–testifying experts, with the non–testifying experts focusing on non–testifying activities as just described. The term litigation support is often used to describe the broader range of services actuaries may provide in the context of a legal dispute.

Most commonly, consulting actuaries are engaged by clients to serve as expert witnesses. The client may be a direct party to the dispute (i.e., the plaintiff or the defendant) or the legal counsel representing a party to the dispute. While an actuary from an insurance company might be called upon to act as an expert witness, it is less common since the most likely client to enlist the services of an actuary is typically his or her employer, and serving as an expert witness for one's employer lacks the impartiality typically looked for in an expert witness.

It is also common to see actuaries representing their employers as fact witnesses�fact witnesses relate their experience, while expert witnesses are additionally called upon to generalize and/or respond to what–if scenarios involving their field of expertise. Notwithstanding the above, actuaries employed in the insurance industry, the academic realm and other walks of life, may be called upon as expert witnesses if they have recognized and highly regarded expertise and experience relating to the matter at hand. For the sake of simplicity, the word client will be used in the remainder of this discussion to describe the party by whom an actuary is engaged to provide expert testimony or any other form of litigation support.

Why are Actuarial Expert Witnesses Important?Part of ensuring that a person or organization receives a fair trial is making sure the persons making the decisions in a particular case (e.g., the judge, jury or legal counsel) understand the issues involved. Actuarial issues, by their nature, tend to be complex and specialized, and a credentialed actuary is best able to understand, articulate and quantify such issues. Therefore, it is important that actuaries participate in the legal process to help ensure the fairness of courtroom and other legal decisions involving actuarial matters.

It is equally important that expert witnesses be qualified to render their opinions. A credentialed actuary is typically the only type of expert qualified to testify regarding actuarial matters, and, therefore the only logical choice for a credible witness.

Since there are typically at least two sides to every dispute, one of the implications of actuarial expert testimony is that actuaries who serve as expert witnesses often find themselves in a dispute that involves another actuary representing the other side. This is all the more reason that qualified and experienced actuaries, who can appropriately understand, review and respond to the work of another actuary, be involved in this process. It also requires professionalism on the part of the opposing actuaries, as set forth in our professional standards.

What Should an Actuarial Expert Witness Know?

Know Your Area of Practice

Before considering a role as an expert witness, you should be comfortable that you are indeed an expert in your area. While the profession's Qualification Standards serve as a guide in this matter, expertise typically implies many years of experience in a given area. As described previously, there are many supporting roles involved in litigation and those who have an interest in this type of work may certainly find roles working with an expert witness.

Know Your Professional Standards

As with any service we provide as actuaries, we must adhere to applicable actuarial standards. This is particularly true in the expert witness domain, as both the underlying technical work (e.g., reserve calculation) and the act of serving as an expert witness are subject to professional standards. In addition, several of the provisions in the Code of Professional Conduct are particularly relevant to litigation support situations.

Know Your Case

It is important that you know the big picture and details of the matter involved. In reviewing information early on, you will need to confirm that you are indeed qualified to be an expert in the specific subject areas. If that is not the case, you need to reach that decision quickly so the client has time to make alternative arrangements. After you confirm your participation in a case, it is important that you know the case inside and out to help your client strategize, present their case effectively and appropriately respond to questions or interrogation from others.

Know Your Limits

The expert witness role is a demanding one. Not only does it require mastery of your subject area, it demands the ability to communicate actuarial matters clearly and succinctly to a non–actuarial audience and forces you to think on your feet, often under adversarial questioning. It is also important that you are able to be objective and think outside the box when called upon to address a what–if question as an expert. Given these demands and the range of skills required to meet them, the role of an expert witness is not for everyone. However, if the role is for you, it is sure to be challenging and rewarding. In particular, this type of work typically gives you the opportunity to work closely with members of the legal profession, exposing you to learning opportunities you might not encounter elsewhere.

Closing Statement

The role of the actuary in litigation support is a vital one, and one that brings with it unique challenges and rewards. It is also a role in which the actuarial profession may be seen and heard by audiences who may otherwise not come into contact with actuaries, strengthening the public's understanding of our profession and the contributions we make. I encourage those for whom this role may be appropriate to consider doing their part for your profession and for the American justice system!

Darryl Wagner, FSA, MAAA, is a principal with Deloitte Consulting LLP, Hartford, CT. He can be reached at