We look at the actuarial role from a behavioural point of view, borrowing from psychology and sociology. Actuaries should give independent advice, but they belong to and depend on various social groups, e.g.: their company, their actuarial association, etc.

Large social groups are tied together by social trust, which is based on shared beliefs and narratives, and builds up slowly, but can erode very quickly. Preventing distrust requires hard work – and possibly some window dressing.

What does this mean for the insurance industry? Insurance is a risky business, hard to manage, and for its complexity it is even harder to make the public trust in it. This throws actuaries into a big dilemma when they create transparency about risks and uncertainties: the more transparency they create, the more risks come to light. Thus, transparency improves real security (visible risks can be dealt with), but may undermine perceived security, as too much bad news erodes social trust.

This leads to two difficult questions. How much transparency is optimal? In the light of social trust, the answer is possibly: somewhat less than 100%. If so, who should decide what to make transparent, and what not?