Hal Phillips

  • Hal Phillips, aka William H. Phillips, aka W. Harold Phillips 
    • senior life actuary with the California Department of Insurance
  • One regulator [W. Harold Phillips (Hal), Senior Life Actuary - CA) summarized the problem in his department - Attachment Two-A:
    • Misleading illustrations are structured as inducements to buy rather than helpful tools to understand the workings of the product or as a comparison between products of competing companies. 
    • In addition, many purchasers as well as agents do not understand what an illustration is and what it is not.
    • Most agents, companies and actuaries agree that there is a problem and that something needs to be done.
    • The industry appears to be in gridlock on the matter.
    • Current regulation of illustrations is very weak.
    • Companies and agents can do pretty much as they please.

1993 Proc. IB 789. - Life Insurance Illustrations Model Regulation - Proceeding Citations

  • Hal Phillips (Calif.) asked whether it was appropriate to include the term "dividend" as a nonguaranteed element.
    • He said the dividend was derived from nonguaranteed elements, so he saw this as a semantic problem.

 1994-4, NAIC Proceedings

  • Bob Wright [VA] asked the California Department attendees to provide more information on the ledger illustration bill they had developed.
    • Harold Phillips (Calif.) reported that they had developed the draft after identifying problems and trying to fashion remedies.
    • He said they had received more than 20 comments, mostly favorable.
    • Bob Wright [VA] suggested that the California proposal was a good beginning, and would provoke people to think and to discuss the issues.
    • Roger Strauss (Iowa) asked if the legislation had passed in California, and Mr. Phillips explained that this was just a discussion document and had not been submitted to the legislature.
    • John Montgomery (Calif.) said the decision had been made to postpone the introduction and wait to see what the NAIC would do.

1993-3, NAIC Proceedings

  • I'm going to have you listen for a few minutes. 
  • I have a theory that the difficulties the life industry faced with illustrations, including the billions lost in lawsuits, stemmed from the lack of understanding of what a scale of illustrated dividends or nonguaranteed elements is and is not.
  • I have assumed there was consensus, at least within the actuarial profession, on the definition of an illustration. I'm not even sure of that today.
  • A solution to the illustration difficulties lies, first, at getting at the heart of a problem.
    • The problem, in my opinion, is lack of understanding of the definition of an illustration.
    • The solution lies in educating the actuarial profession, companies, sales force, and the public on what an illustration is and what it is not.
  • I place a large share of the blame for the difficulties in the industry with our profession for not initiating and carrying through such education, but it's not too late.

--  Hal Phillips, aka William H. Phillips, a senior life actuary with the California Department of Insurance

1998 - SOA - Current Issues in Sales Illustrations, Society of Actuaries - 26p

  • The actuary cannot and should not attempt to estimate or predict the future.
    • This would reduce actuarial work to guessing.
  • ⇒  What then are actuarial assumptions?

1998 01 - SOA - Actuarial Futures - Actuarial Assumptions and the Future, by W. Harold Phillips [Hal], Senior Life Actuary at the California Department of Insurance, Society of Actuaries - 4p

  • These are examples of a transgression of the definition, as I've defined it.
  • The Academy committee reporting on the work about annuity illustrations lists as the first supportability objective, "Ensure that information provided by the company creates consumer expectations for nonguaranteed elements that are not unreasonable." - <WishList>
    • Now, I could have stated that better: "As does not create unreasonable expectations."
    • But better still, I'm not sure that illustrations should be creating any expectations other than that there will be something above the guarantee.
    • I don't believe an illustration should create any expectation because that will only get you in trouble, and it detracts from the understanding of what an illustration is and is not.
      • An illustration does not show what you can expect.
  • This is the corker, I think.
  • There was a recent article in Contingency called, "Was Leo Tolstoy an illustration actuary?" - <WishList>
    • It was very disappointing to me, although I liked the catchy title.
  • It speaks of an illustration as a picture of how a policy is expected to perform over the next several years.
    • It talks of a ledger predicting miraculous performance.
    • It speaks of assumptions having no relation to the real world.
  • All this in an actuarial journal. I have written to the editor.  --- I haven't heard from him yet.
    • These statements are at odds with our simple definition, and only add to the confusion abounding on the subject.

--  Hal Phillips, aka William H. Phillips - a senior life actuary with the California Department of Insurance

1998 - SOA - Current Issues in Sales Illustrations, Society of Actuaries - 26p