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IAI Actuarial Core Principles · Business Management · Business and consumer needs, the industry value chain and competitive forces

A bancassurance partner bank wants an insurer to push a high-commission savings plan to its customers to boost fee income. The insurer's own needs analysis shows most of those customers want simple term cover and have short liquidity horizons. The insurer's chief actuary is asked to support the plan. Which course of action is most consistent with serving business and consumer needs while acting professionally?

The chief actuary should advise against the plan as proposed, recommend products that match the customers' evidenced needs such as simple term cover, and escalate if the advice is ignored. This balances commercial interests with the consumer need and the actuary's professional duty of integrity.

  1. ASupport the plan because the partner's income is the priority
  2. BSupport the plan and rely on disclosure documents alone to protect customers
  3. CDecline to comment since sales are not an actuarial matter
  4. DAdvise against pushing the plan as proposed, recommend products matching the evidenced needs, and escalate concerns if ignoredCorrect
  5. Withdraw from the partnership immediately without discussion

Explanation

Long-term business success depends on products fitting real consumer needs, and an actuary has a duty to act with integrity and in the public interest. Advising and escalating addresses both. Merely relying on disclosure or staying silent fails that duty, and abrupt withdrawal is disproportionate.

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