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IAI Actuarial Core Principles · Business Management · Characteristics of a profession and the Actuaries' Code

A Fellow of the IAI is pressed by a client to provide a valuation opinion. The Fellow has deep experience in life insurance but none in the health-insurance product in question, and the opinion would be relied on by the regulator. Which response best applies the Code and the characteristics of a profession?

The Fellow should decline or limit the work unless competence is secured, such as by involving an experienced actuary or peer review, and should state limitations. A liability waiver, a higher fee or reliance on the regulator does not remove the duty to work competently.

  1. AAccept, as actuarial training is transferable and the client accepts the risk
  2. BAccept and quote a high fee to reflect the risk
  3. CAccept only if the client signs an exclusion of liability, then proceed alone
  4. DDecline or limit the work unless competence is obtained, for example by involving a suitably experienced actuary or peer review, and state any limitationsCorrect
  5. Accept and rely on the regulator to spot any weakness

Explanation

Professions rest on competence and public trust, so members must work only within their competence or obtain suitable help and peer review. A client waiver or liability exclusion does not cure lack of competence, and reliance on the regulator shifts responsibility wrongly. Higher fees are irrelevant to the duty.

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