IAI Actuarial Core Principles · Business Management · Professional negligence
A Delhi company relied on an actuary's report but ignored her clear written warning not to use the results for a purpose beyond the report's scope, then suffered loss. Which defence is most relevant for the actuary?
The relevant defence is the client's own fault or contributory negligence: by ignoring a clear written warning and using the report beyond its scope, the company helped cause its loss, which can reduce or defeat the claim against the actuary.
- AContributory negligence or the client's own fault in using the report outside its stated scope, which may reduce or defeat the claimCorrect
- BPrivity of contract, which means that no duty can ever be owed
- CAct of God, because any loss is unforeseeable
- DWaiver by the Institute of Actuaries of India
- Sovereign immunity
Explanation
Where the client disregards an explicit warning and uses advice outside its stated scope, the client's own conduct is a cause of the loss, so contributory fault or lack of causation limits liability. Privity does not remove a contractual duty, and the other options have no application.
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