Actuary As Expert Witness Preparing the Hearing Officer March 13, 2006

Actuary/Attorney Mission Package your story to engage the hearing officer’s interest in terms he understands so that he cares about your side of the story.

Persuasive vs. Factual Proceedings Public Policy Proceeding Involves changing statute, regulation, or practice. Political agenda Financial Disputes Disputes over rate levels or business contracts

Sizing Up The Hearing Officer Tenure with organization Education Prior work experience Future work ambitions Politically appointed? Relationship with your attorney Actuarial support available to him

Actuarial Support for the Hearing Officer Indirect – Plaintiff Direct - Staff or Consulting Actuary Frame issues in English Summarize root of different opinions Persuade to your side (Quotable quotes)

Objectives of Expert Testimony Stay within the scope of the decision that needs to be made. Build the hearing officer’s understanding of the facts and issues. Establish professional credibility

Hearing Officer Interest Make a timely decision Avoid reversal on appeal Promote political objectives

Hearing Officer Understanding Expert level of understanding unnecessary Unlikely to invest much effort in the education process

A Hearing is a Show The story – The action or document that is the basis of the dispute. The program – Pre-filed direct testimony The performance – Cross examination The critics – Lawyers’ briefs The audience - Adjudication

Pre-Filed Direct Hearing Officer’s road map to the issues, people, and documents. Provides fundamental education so that any prior documents are intelligible. Should include definitions of key concepts, acronyms, and “terms of art”.

The Value of Pre-Filed Testimony People “listen” to what they read differently than to what they hear. Written statements can be more accurately framed within the desired context. Written statements are harder to ignore.

Cross Examination The only show in town where the script is written in real time. The only show in town where the script is written in real time. The only human battle that involves no guns, car chases, expletives, or special effects. The only human battle that involves no guns, car chases, expletives, or special effects. The most decisive event for the hearing officer. The most decisive event for the hearing officer.

Your Performance is Good if The hearing officer remained conscious throughout your testimony, and did not appear to be making grocery lists or doing the crossword. The hearing officer remained conscious throughout your testimony, and did not appear to be making grocery lists or doing the crossword. The hearing officer asked you at least one intelligent question. The hearing officer asked you at least one intelligent question. Opposing counsel is acting Opposing counsel is acting funny. funny. Your counsel suggests a debriefing at the bar down the street. Your counsel suggests a debriefing at the bar down the street.

Your Performance is Not Good if You speak over the hearing officer’s head. You speak over the hearing officer’s head. You contradict yourself. You contradict yourself. You deliberately ignore established actuarial standards of practice. You deliberately ignore established actuarial standards of practice. Your counsel is distressed. Your counsel is distressed.

How to Lose Your Hearing Officer Speaking Geek Q: You mentioned other statistics as well that one might look at in judging the fit for a regression. Can you discuss what they are and what they’re measuring?

How to Lose Your Hearing Officer Contradicting Yourself Pre-Filed Direct: Company X uses the average of paid and incurred loss projections in its trend for bodily injury coverages. This method, which the Commissioner does not use, is inappropriate for several reasons….. Because incurred estimates have been the most accurate predictors of ultimate experience historically, and because there is no reason to believe this will change, the Commissioner should reject company X’s proposal to incorporate paid development in ultimate trend projections.

How to Lose Your Hearing Officer Ignoring Actuarial Standards Pre-Filed Direct: The company filing also includes actual loss experience related to hurricanes. Actual hurricane losses have been less than 2% of losses over the last 20 year period. Complete reliance on historical loss data might not be appropriate because of the limited time period. However, in comparison with actual historic experience, the results of the RMS hurricane model appear to be unrealistic. In addition, the AIR hurricane model should not be used without consideration of the actual historic loss data.

Legal Briefs Summarizes the basis of why you are right and “they” are wrong. In highly technical proceedings, hearing officers rely on these documents for paraphrasing in the decision. Because of the potential for appeal, and because lawyers are not under oath, technical review by an actuary is critical.

Technical Review of Briefs Are the arguments supported by the record (documents, exhibits, citations)? Are the facts presented within an accurate context? How much does each argument affect the outcome?

Adjudication The best resolution of a dispute is settlement, not adjudication.