What a calculator does, and what a retained actuary adds

A transparent calculator and a retained actuary do different things. A calculator applies established methodology to the inputs entered and returns a figure traceable to every input. A retained actuary provides an independent professional opinion, signed, that they can explain and support. This article describes what each one produces so the difference is clear. It is background, not legal advice for a specific file.

What a calculator produces

A transparent calculator like DamageIQ applies established actuarial methodology to the inputs and assumptions provided and returns a figure traceable to every input. It is commonly used for:

• Early case assessment. A transparent figure in minutes, from the facts entered.
• Negotiation and mediation. A figure whose basis can be explained, and scenarios that change one assumption at a time.
• Sensitivity testing. Seeing how the total moves as the discount rate, retirement age, or life expectancy change.
• Internal and volume work. Valuing many files on the same engine and data editions.

It is a calculation, not an expert opinion: the assumptions are yours to set, and the output is only ever a function of the inputs entered.

What a retained actuary adds

A retained actuary provides something a calculator does not: an independent professional opinion, signed, together with the ability to explain and support it. That is what is involved when:

• A signed report is required for trial, an expert affidavit, or to be entered as evidence.
• The assumptions are contested (life expectancy, earning capacity, contingencies) and turn on professional judgment.
• The facts are complex or novel in a way a standard model does not capture.
• Expert testimony or cross-examination on methodology is involved.

How the two relate

The two are complementary. A calculator scopes a claim, runs scenarios, and supports negotiation; a retained actuary provides a signed opinion where a file proceeds to trial or the numbers are genuinely in dispute. Because DamageIQ records its engine version and data editions with every calculation, an early figure and a later formal report rest on the same transparent methodology. DamageIQ's engine was built by the forensic actuarial team at Quantis Valuations, so the calculator and a retained actuarial report draw on the same approach.

Try it

The free PV Multiplier calculator produces present-value factors, and a full DamageIQ file covers loss of income and future cost of care. For the method behind the numbers, see How present-value damages are calculated in Canada.

By Mike Austin, FCIA, FSA. Fellow of the Canadian Institute of Actuaries and the Society of Actuaries.