We look at the actuarial role from a behavioural point of view, taking into account evidence from psychology and sociology. Actuaries are technical experts who should have a high degree of independence, but nevertheless belong to and depend on various social groups, e.g.: their company, their actuarial association, the financial services industry, and the surrounding economic-political sphere. Large and complex social groups are tied together not by kinship, but by social trust, which is based on shared beliefs and narratives. The problem with social trust is that it builds up extremely slowly, but can erode very quickly. To prevent distrust, the group must perform well, or at least be perceived as performing well. This requires hard work - and possibly some window dressing.

What does this mean for the insurance industry? Even when managed by skilled and engaged people, insurance is without doubt a risky business. It is hard work to run it well, and for its complexity even harder to make the public trust in it. This special kind of social trust throws actuaries into a big dilemma. The role of actuaries, in particular (but not only) in the context of regulation, is to create transparency about risks and uncertainties. But, 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. Distrust can affect single companies, but also whole markets.

This leads to two very 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?