How to retire with dignity

Esko Kivisaari
Past Chairperson AAE
Chairperson AAE Advisory Panel
Chairperson AAE Artifical Intelligence/Data Science Working Group


A colleague of mine stayed some years ago for some time in a developing country. His wife worked in a telecommunications firm so this colleague had time to continue his studies. He also spent some time consulting the local insurance association.


One of the successful programs was called ‘How to retire with dignity’. The target group consisted of army officers, policemen, prison guards and so on. The idea was to convert corrupted money into an insurance policy so that the dirty origin became hidden. And it was also good risk management, anticipating a possible regime change and making the money inaccessible for new rulers.

Well, this was a developing country and Europe is more civilised, isn’t it? But in this civilised Europe of ours we have Vladimir Putin’s Russia cowardly attack on its neighbouring Ukraine. The EU and many other Western nations have ordered the freezing of the assets of those Russians thought to be connected to Kremlin.


It is fairly easy to seize the yachts and property. But much of the assets will be in different financial instruments. Insurance is among those instruments that can be used to blur the identity of the owner of an asset. Investment vehicles in the disguise of insurance policies can be used in money laundering, tax evasion and aggressive tax planning. In addition non-life insurance can also be used: a simple example is to pay an excessively large advance premium and then change the account number before the excess is returned. Spotting such actions is much more difficult than seizing yachts. The problem is of course not just Russian money – in our civilised Western systems we have huge amounts of money owned by dictators etc., stolen from their people and hidden in different structures.


The main responsibility lies with management. The temptation to engage in bad activities is high as the business can be extremely profitable because the pricing does not need to be competitive. Compliance officers and internal audit are supposed to check that the rules are not breached. With a high probability these activities also require actuaries. Actuaries do not bear the main responsibility in issues like this but they are certainly needed, at least regarding the risk management involved.


Many actuarial bodies have condemned Russia. There are also sad examples of actuaries saying that they are just technical experts and do not want to be involved in politics. A usual defence is that all local regulation is respected in the technical work the actuary is doing and at least somebody else is responsible for what has been done.


I think actuaries should be doing more than just condemning the war Russia started. Actuaries should be a cooperating party in implementing the sanctions against Putin’s thugs. This should mean declining any participation in dubious transactions and revealing all their knowledge of activities where Russian money is hidden in insurance policies or other financial instruments.


When actuaries talk of ethics in their meetings they talk of nice things they are doing for the good of our societies. They do not talk of money laundering, tax evasion or aggressive tax planning. It could of course be that they are honestly not involved in such activities. I however have the fear that the whole issue is a taboo for actuaries – looking for loopholes is not thought to be that bad after all.


I guess it is time for actuaries to recognise their responsibility in this area. In the short run it should mean distancing ourselves from bad practices, i.e., denouncing loudly all work done by actuaries that helps Putin’s thugs hide their money. In the longer run we should have in our code of conduct etc. rules for actuaries to work according to UN[1] and OECD [2]ideals instead of hiding behind national legislation making bad practices possible.


UNEP’s Principles for Sustainable Insurance, launched by the UN Environment Programme, celebrate the 10th anniversary of their existence this June. Actuaries might have some housekeeping to do so that they can support SDG’s[3] and one day retire with dignity.


[1] See, e.g.,

[2] See, e.g.,

[3] Sustainable Development Goals, see, e.g.,


This blog is written in a personal capacity.

22 March 2022


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