IAI Actuarial Core Principles · Business Management

Activities of the Institute of Actuaries of India: formula sheet

Full chapter guide

Key formulas

Source of authority: IAI = statutory body under the Actuaries Act 2006; Always link the IAI's powers to the Act, not to its own wishes.
Governance chain: Members → elect Council → Council forms committees → committees report to Council; The Central Government also nominates some Council members and supervises the IAI.
Membership ladder: Student → Associate → Fellow; Progress depends on passing exams and meeting IAI conditions. Other classes exist; check the current rules.
Core purposes: Regulate + educate + set standards + discipline + serve the public interest; Use this five-part list to structure any objectives answer.
Core Principles modules: Actuarial Statistics (CS1, CS2) + Actuarial Mathematics (CM1, CM2) + Business (CB1, CB2, CB3); All three modules must be passed to qualify as an Associate or Fellow.
Pass rule for CS1, CS2, CM1, CM2 (from November 2025): Paper A ≥ 30%, Paper B ≥ 30%, aggregate ≥ 50%; aggregate = 0.7 × Paper A + 0.3 × Paper B; Paper A and Paper B are weighted 70:30. The IAI may amend this and confirms it with results.
Pass rule for CB1, CB2, CB3: Score ≥ 50%; Single overall pass mark, subject to IAI amendment.
Paper formats: CS/CM Paper A: 3 h 15 min; Paper B: 1 h 45 min computer-based; CB1/CB2: 3 h 15 min; CB3 (recent): 1 h 30 min; Recent Paper A, CB1, CB2 and CB3 papers carried 100 marks.
MCQ marks: MCQ marks = number of MCQs × 2; For example, 15 MCQs give 30 marks and 10 MCQs give 20 marks. The number varies by session.
Three-layer framework: Code of conduct (principles) + Practice standards (mandatory practice) + Discipline (enforcement) = professional regulation; Use this as the skeleton for any descriptive answer.
APS versus guidance note: APS = members are expected to comply; Guidance note = supports and advises; Do not say guidance notes are legally binding. Say they are help, while standards are required practice.
Purpose test: Rule → who is protected → how trust is maintained; End each explanation by naming the public-interest benefit.
Purpose of CPD: Qualification + CPD = continuing competence; A memory aid, not a calculation. CPD keeps skills current after qualifying.
Purpose of peer review: Work + independent review = fewer errors and better-supported judgements; A memory aid. The reviewer should be suitably qualified and not the main author.
Responsibility rule: Responsibility for advice stays with the actuary who signs it, even after peer review; Peer review supports the work. It does not transfer responsibility.
CPD record: Activity + date + time spent + relevance to your work; A sensible record to keep. Check current IAI rules for the exact hours and format required.

Quick revision

The IAI is the professional body for actuaries in India, and its activities exist to serve members and the public.
Governance covers how the IAI is constituted, who makes decisions and how they are held accountable.
Education and exams set the entry standard to the profession.
Core Principles has three modules: Actuarial Statistics, Actuarial Mathematics and Business; all must be passed to qualify.
CB3 pass mark is at least 50%, but IAI may amend it and confirms it with results.
Professional conduct rules protect clients, employers and public trust.
Standards guide the quality and consistency of actuarial work.
Discipline is the enforcement side: it gives conduct rules real consequences.
CPD keeps members' knowledge current after qualification.
Peer review gives a second check on the quality of work.
Regulation, research and public interest show the profession's value beyond its members.
Always answer with purpose, mechanism and beneficiary.

Common mistakes

Treating the IAI as a private club with no legal backing. Fix: Always say it is a statutory body created by the Actuaries Act 2006 with legal powers.
Saying the Council is fully elected, or fully appointed by the government. Fix: Say the Council has both elected members and government nominees. Check the current composition in IAI documents.
Applying the 50% CB rule to CS and CM subjects. Fix: Remember CS and CM have two papers: 30% in each and 50% aggregate. CB subjects need 50% overall.
Averaging Paper A and Paper B equally. Fix: Use the 70:30 weighting: 0.7 × Paper A + 0.3 × Paper B.
Treating Actuarial Practice Standards and guidance notes as the same thing. Fix: Remember that standards set expected practice, while guidance notes support and explain. State the difference every time.
Listing code principles without applying them to the scenario. Fix: Link each principle to a specific fact in the question and say what action follows.
Treating CPD as only formal courses or exams. Fix: List varied activities such as reading, seminars, mentoring and on-the-job learning, provided they are relevant.
Saying peer review removes the author's responsibility. Fix: State that the actuary remains responsible for the advice. Review is a check, not a transfer.
Saying the IAI is the insurance regulator. Fix: Remember: IRDAI supervises insurers. The IAI regulates and develops the actuarial profession and supports regulators with technical input.
Writing only about members' benefits. Fix: Always add the public interest angle: standards and discipline protect policyholders and other users of actuarial advice.

Exam tips

Open every answer with the Actuaries Act 2006. It anchors the whole topic.
Use the five-part purpose list for objectives questions, and give one line of reason per point.
In MCQs, reject options that say the IAI is unsupervised or has no link to the Central Government.
Do not quote section numbers unless you are certain. Describe the rule in words instead.
Check the latest IAI website for current Council composition and membership classes before the exam.
Learn the module structure and the subject codes with their full names; MCQs often test this.
Memorise the pass rule for CS/CM and CB separately, with the 70:30 weighting.
Always add that the IAI may amend pass marks and confirms them with results.